Temperature compensation is a critical feature of circadian rhythms, but how it is achieved remains elusive. Here, we uncovered the important role played by the Drosophila PERIOD (PER) phosphodegron in temperature compensation. Using CRISPR-Cas9, we introduced a series of mutations that altered three Serines (S44, 45 and 47) belonging to the PER phosphodegron, the functional homolog of mammalian PER2’s S487 phosphodegron, which impacts temperature compensation. While all three Serine to Alanine substitutions lengthened period at all temperatures tested, temperature compensation was differentially affected. S44A and S45A substitutions caused decreased temperature compensation, while S47A resulted in overcompensation. These results thus reveal unexpected functional heterogeneity of phosphodegron residues in thermal compensation. Furthermore, mutations impairing phosphorylation of the per^s phosphocluster decreased thermal compensation, consistent with its inhibitory role on S47 phosphorylation. Interestingly, the S47A substitution caused increased accumulation of hyper-phosphorylated PER at warmer temperatures. This finding was corroborated by cell culture assays in which S47A resulted in excessive temperature compensation of phosphorylation-dependent PER degradation. Thus, we show a novel role of the PER phosphodegron in temperature compensation through temperature-dependent modulation of the abundance of hyper-phosphorylated PER. Our work also reveals interesting mechanistic convergences and differences between mammalian and Drosophila temperature compensation of the circadian clock.