Kaposi sarcoma-associated herpesvirus (KSHV) is an oncogenic virus and the culprit behind the human disease Kaposi sarcoma (KS), an AIDS-defining malignancy. KSHV encodes a viral G-protein-coupled receptor (vGPCR) critical for the initiation and progression of KS. In this study, we identified that YAP/TAZ, two homologous oncoproteins inhibited by the Hippo tumor suppressor pathway, are activated in KSHV-infected cells in vitro, KS-like mouse tumors and clinical human KS specimens. The KSHV-encoded vGPCR acts through Gq/11 and G12/13 to inhibit the Hippo pathway kinases Lats1/2, promoting the activation of YAP/TAZ. Furthermore, depletion of YAP/TAZ blocks vGPCR-induced cell proliferation and tumorigenesis in a xenograft mouse model. The vGPCR-transformed cells are sensitive to pharmacologic inhibition of YAP. Our study establishes a pivotal role of the Hippo pathway in mediating the oncogenic activity of KSHV and development of KS, and also suggests a potential of using YAP inhibitors for KS intervention.