Summary Contact inhibition of proliferation (CIP) is a key mechanism that transduces the cell density status of tissue and organs into a unique transcriptional program by translocating YAP between the nucleus and the cytoplasm. However, the nature of the cell density-dependent cues that regulate the YAP distribution remains unclear. Here, we present evidence that tight junctions serve as a platform that controls both distribution and activity of LATS1, a kinase that phosphorylates YAP. This CIP effect is mediated by the scaffold function of junctional protein, ZO-2, by promoting LATS1 interaction with YAP in the cytoplasm, and then targeting the tripartite complex to tight junctions. There, LATS1 is activated by angiomotin and NF2, thereby stimulating YAP phosphorylation and its cytoplasmic retention. Our findings delineate novel mechanisms governing CIP, in which ZO-2 utilizes the status of cell-cell cohesion to control the phosphorylation status and therefore inactivation of YAP by LATS1 in the cytoplasm.