The role of the unfolded protein response (UPR) in tissue homeostasis remains largely unknown. Here we find that loss of Mst1/2, the mammalian Hippo orthologues, or their regulator WW45, leads to a remarkably enlarged endoplasmic reticulum (ER) size-associated UPR. Intriguingly, attenuation of the UPR by tauroursodeoxycholic acid (TUDCA) diminishes Mst1/2 mutant-driven liver overgrowth and tumorigenesis by promoting nuclear exit and degradation of Hippo downstream effector Yap. Yap is required for UPR activity and ER expansion to alleviate ER stress. During the adaptive stage of the UPR, PERK kinase-eIF2α axis activates Yap, while prolonged ER stress-induced Hippo signalling triggers assembly of the GADD34/PP1 complex in a negative feedback loop to inhibit Yap and promote apoptosis. Significantly, the deregulation of UPR signals associated with Yap activation is found in a substantial fraction of human hepatocellular carcinoma (HCC). Thus, we conclude Yap integrates Hippo and UPR signalling to control liver size and tumorigenesis.