The Hippo effector Yorkie controls normal tissue growth by antagonizing scalloped-mediated default repression.

The Hippo tumor suppressor pathway restricts tissue growth by inactivating the transcriptional coactivator Yki. Although Sd has been implicated as a DNA-binding transcription factor partner for Yki and can genetically account for gain-of-function Yki phenotypes, how Yki regulates normal tissue growth remains a long-standing puzzle because Sd, unlike Yki, is dispensable for normal growth in most Drosophila tissues. Here we show that the yki mutant phenotypes in multiple developmental contexts are rescued by inactivation of Sd, suggesting that Sd functions as a default repressor and that Yki promotes normal tissue growth by relieving Sd-mediated default repression. We further identify Tgi as a cofactor involved in Sd's default repressor function and demonstrate that the mammalian ortholog of Tgi potently suppresses the YAP oncoprotein in transgenic mice. These findings fill a major gap in Hippo-mediated transcriptional regulation and open up possibilities for modulating the YAP oncoprotein in cancer and regenerative medicine.