SARS-CoV-2 is the coronavirus causing the catastrophic pandemic which already led to> 120 millions of infections and> 2.6 millions of deaths . Hydroxychloroquine (HCQ) has been shown to own promising potential in clinically combating SARS-CoV-2 but the underlying mechanisms still remain almost unknown . So far, all action sites are proposed on the host cells, and in particular no specific viral target protein has been experimentally identified . In this study, by use of DIC microscopy and NMR spectroscopy, for the first time we have decoded that HCQ specifically binds to both N-terminal domain (NTD) and C-terminal domain (CTD) of SARS-CoV-2 nucleocapsid (N) protein to inhibit their interactions with nucleic acids (NAs), as well as to disrupt its NA-induced liquid-liquid phase separation (LLPS) essential for the viral life cycle including the package of gRNA and N protein into new virions . These results suggest that HCQ may achieve its anti-SARS-CoV-2 activity by interfering in several key steps of the viral life cycle . The study not only provides a structural basis for the anti-SARS-CoV-2 activity of HCQ, but also indicates that SARS-CoV-2 N protein and its LLPS represent key targets for further optimization and development of anti-SARS-CoV-2 drugs.