The role of cyclin-dependent kinase inhibitor 1B (CDKN1B) in non-alcoholic fatty liver disease (NAFLD) and its underlying mechanism remain unclear. In the present study, NAFLD models were constructed in high-fat diet (HFD)-fed mice and free fatty acid (FFA)-treated HepG2 cells. The expression of CDKN1B, markers of liver injury, inflammation, and mitophagy (PINK1, Parkin, Beclin1, and the LC3II/I ratio) were assessed. CDKN1B overexpression and knockdown were performed in HepG2 cells to investigate the functional roles of CDKN1B. The phase separation potential of CDKN1B was predicted bioinformatically and validated via in vitro droplet assays, immunofluorescence, and fluorescence recovery after photobleaching (FRAP). To determine whether the protective effects of CDKN1B depend on its phase separation property, the phase separation inhibitor 1,6-hexanediol (1,6-HD) was applied at graded concentrations. The results indicated that CDKN1B was downregulated in both in vivo and in vitro NAFLD models, accompanied by lipid accumulation, inflammation, mitochondrial dysfunction, and impaired mitophagy. CDKN1B overexpression effectively reversed these pathologies, whereas CDKN1B knockdown exacerbated them. Moreover, CDKN1B contains an intrinsically disordered region and undergoes liquid-liquid phase separation (LLPS) both in vitro and in HepG2 cells. Critically, 1,6-HD abolished the protective effects of CDKN1B overexpression on mitophagy, mitochondrial integrity, lipid metabolism, and inflammation in a concentration-dependent manner. Collectively, CDKN1B alleviates NAFLD by promoting mitophagy, and this protective function is dependent on its ability to undergo LLPS. This study unveils a novel phase-separation-dependent mechanism of CDKN1B in regulating mitochondrial function and mitophagy, presenting CDKN1B condensates as a potential new target for NAFLD therapy.