Damage-induced long non-coding RNAs (dilncRNA) synthesized at DNA double-strand breaks (DSBs) by RNA polymerase II are necessary for DNA-damage-response (DDR) focus formation. We demonstrate that induction of DSBs results in the assembly of functional promoters that include a complete RNA polymerase II preinitiation complex, MED1 and CDK9. Absence or inactivation of these factors causes a reduction in DDR foci both in vivo and in an in vitro system that reconstitutes DDR events on nucleosomes. We also show that dilncRNAs drive molecular crowding of DDR proteins, such as 53BP1, into foci that exhibit liquid-liquid phase-separation condensate properties. We propose that the assembly of DSB-induced transcriptional promoters drives RNA synthesis, which stimulates phase separation of DDR factors in the shape of foci.