In cells, the curved clathrin structures in vesicle budding are well characterized, while the flat ones remain poorly understood. We reconstituted the flat assembly of ESCRT-0 protein HRS and clathrin onto lipid membranes in vitro. HRS was found to form protein condensates. These condensates spread as a two-dimensional layer on negatively charged membranes and promoted the assembly of clathrin into a flat coat. Correlative cryo-tomography of HRS-labeled endosomes revealed a pure hexagonal lattice, consistent with flat clathrin structures. Cholesterol enhanced HRS recruitment to the membrane both in cells and in supported bilayers. Furthermore, cholesterol promoted the phase separation of HRS onto membranes, which in turn concentrated cholesterol underneath. This positive feedback promoted the formation of HRS-clathrin microdomains that sorted reconstituted ubiquitinated cargoes. Altogether, our results show that the unique architecture of ESCRT-0 is assembled by the two-dimensional phase-separation of HRS which drives the assembly of flat clathrin coats.