Many eukaryotic viruses require membrane-bound compartments for replication, but no such organelles are known to be formed by prokaryotic viruses. Bacteriophages of the Chimalliviridae family sequester their genomes within a phage-generated organelle, the phage nucleus, which is enclosed by a lattice of the viral protein ChmA. We show that inhibiting phage nucleus formation arrests infections at an early stage in which the injected phage genome is enclosed within a membrane-bound early phage infection (EPI) vesicle. Early phage genes are expressed from the EPI vesicle, demonstrating its functionality as a prokaryotic, transcriptionally active, membrane-bound organelle. We also show that the phage nucleus is essential, with genome replication beginning after the injected DNA is transferred from the EPI vesicle to the phage nucleus. Our results show that Chimalliviridae require two sophisticated subcellular compartments of distinct compositions and functions that facilitate successive stages of the viral life cycle.