Ambient temperature varies constantly. However, the period of circadian pacemakers is remarkably stable over a wide-range of ecologically- and physiologically-relevant temperatures, even though the kinetics of most biochemical reactions accelerates as temperature rises. This thermal buffering phenomenon, called 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. This phosphorylation hotspot is crucial for PER proteasomal degradation and is the functional homolog of mammalian PER2 S478 phosphodegron, which also impacts temperature compensation. Using CRISPR-Cas9, we introduced a series of mutations that altered three Serines of the PER phosphodegron. While all three Serine to Alanine substitutions lengthened period at all temperatures tested, temperature compensation was differentially affected. S44A and S45A substitutions caused undercompensation, 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 showed undercompensation, consistent with its inhibitory role on S47 phosphorylation. We observed that S47A substitution caused increased accumulation of hyper-phosphorylated PER at warmer temperatures. This finding was corroborated by cell culture assays in which S47A slowed down phosphorylation-dependent PER degradation at high temperatures, causing PER degradation to be excessively temperature-compensated. Thus, our results point to a novel role of the PER phosphodegron in temperature compensation through temperature-dependent modulation of the abundance of hyper-phosphorylated PER. Our work reveals interesting mechanistic convergences and differences between mammalian and Drosophila temperature compensation of the circadian clock.