<jats:p>Liquid–liquid phase separation (LLPS) phenomena are ubiquitous in biological systems, as various cellular LLPS structures control important biological processes. Due to their ease of in vitro assembly into membraneless compartments and their presence within modern cells, LLPS systems have been postulated to be one potential form that the first cells on Earth took on. Recently, liquid crystal (LC)-coacervate droplets assembled from aqueous solutions of short double-stranded DNA (s-dsDNA) and poly-L-lysine (PLL) have been reported. Such LC-coacervates conjugate the advantages of an associative LLPS with the relevant long-range ordering and fluidity properties typical of LC, which reflect and propagate the physico-chemical properties of their molecular constituents. Here, we investigate the structure, assembly, and function of DNA LC-coacervates in the context of prebiotic molecular evolution and the emergence of functional protocells on early Earth. We observe through polarization microscopy that LC-coacervate systems can be dynamically assembled and disassembled based on prebiotically available environmental factors including temperature, salinity, and dehydration/rehydration cycles. Based on these observations, we discuss how LC-coacervates can in principle provide selective pressures effecting and sustaining chemical evolution within partially ordered compartments. Finally, we speculate about the potential for LC-coacervates to perform various biologically relevant properties, such as segregation and concentration of biomolecules, catalysis, and scaffolding, potentially providing additional structural complexity, such as linearization of nucleic acids and peptides within the LC ordered matrix, that could have promoted more efficient polymerization. While there are still a number of remaining open questions regarding coacervates, as protocell models, including how modern biologies acquired such membraneless organelles, further elucidation of the structure and function of different LLPS systems in the context of origins of life and prebiotic chemistry could provide new insights for understanding new pathways of molecular evolution possibly leading to the emergence of the first cells on Earth.</jats:p>