Off-lattice active Brownian particles form clusters and undergo phase separation even in the absence of attractions or velocity-alignment mechanisms. Arguments that explain this phenomenon appeal only to the ability of particles to move persistently in a direction that fluctuates, but existing lattice models of hard particles that account for this behavior do not exhibit phase separation. Here we present a lattice model of active matter that exhibits motility-induced phase separation in the absence of velocity alignment. Using direct and rare-event sampling of dynamical trajectories we show that clustering and phase separation are accompanied by pronounced fluctuations of static and dynamic order parameters. This model provides a complement to off-lattice models for the study of motility-induced phase separation.