TDP-43 protein is dysregulated in several neurodegenerative diseases, which often have a multifactorial nature and may have extrinsic stressors as a "second hit." TDP-43 undergoes reversible nuclear condensation in stressed cells including neurons. Here, we demonstrate that stress-inducible nuclear TDP-43 condensates are RNA-depleted, non-liquid assemblies distinct from the known nuclear bodies. Their formation requires TDP-43 oligomerization and ATP and is inhibited by RNA. Using a confocal nanoscanning assay, we find that amyotrophic lateral sclerosis (ALS)-linked mutations alter stress-induced TDP-43 condensation by changing its affinity to liquid-like ribonucleoprotein assemblies. Stress-induced nuclear condensation transiently inactivates TDP-43, leading to loss of interaction with its protein binding partners and loss of function in splicing. Splicing changes are especially prominent and persisting for STMN2 RNA, and STMN2 protein becomes rapidly depleted early during stress. Our results point to early pathological changes to TDP-43 in the nucleus and support therapeutic modulation of stress response in ALS.