Large ensembles of interacting, out-of-equilibrium agents are a paradigm of active matter. Their constituents' intrinsic activity may entail the spontaneous separation into localized phases of high and low densities. Motile microbes, equipped with ATP-fueled engines, are prime examples of such phase-separating active matter, which is fundamental in myriad biological processes. The fact that spontaneous spatial aggregation is not widely recognized as a general feature of microbial communities challenges the generalisation of phase separation beyond artificial active systems. Here, we report on the phase separation of populations of Chlamydomonas reinhardtii that can be controlled by light in a fully reversible manner. We trace this phenomenon back to the light- and density-dependent motility, thus bridging the gap from light perception on the single-cell level to collective spatial self-organization into regions of high and low density. Its spectral sensitivity suggests that microbial motility and phase separation are regulated by the activity of the photosynthetic machinery. Characteristic fingerprints of the stability and dynamics of this active system paint a picture that cannot be reconciled with the current physical understanding of phase separation in artificial active matter, whereby collective behavior can emerge from inherent motility modulation in response to changing stimuli. Our results therefore point towards the existence of a broader class of self-organization phenomena in living systems.