Aqueous solutions of (hydroxypropyl) cellulose, which can be either isotropic (dilute regime) or cholesteric (concentrated regime) at room temperature, exhibit reversible phase separation upon heating above similar to 37 degrees C. The biphasic system does not gel and includes a concentrated phase having the appearance of an emulsion of poorly organized microaggregates, and a dilute solution from which the concentrated phase cannot be completely separated. Ellipticity data suggest the onset of cholesteric order at temperatures slightly below those at which isotropic solutions undergo phase separation. This hint of the formation of the mesophase is detected at concentrations unusually low (similar to 0.4% v/v). The conjugation of the two phases was evidenced by determination of the individual volumes and concentrations. The pseudo phase diagram includes boundaries for the high-temperature biphasic region which are not readily interpreted in terms of a heat-induced crystallization process. It is suggested that the primary event controlling phase separation is the driving force for the formation of a mesophase in a solvent which becomes poorer upon increasing temperature ("inverted" wide region of the theoretical diagram). The development of well-organized liquid crystalline domains, and their possible evolution toward a crystalline state, may be greatly slowed down by kinetic effects.