We have previously used mosaic flies to screen for tumour suppressors or negative regulators of cell proliferation. The cellular composition of these flies resembles that of cancer patients who are chimaeric individuals carrying a small number of mutated somatic cells. One of the genes we identified is the large tumour suppressor gene, lats (also known as wts), which encodes a putative serine/threonine kinase. Somatic cells mutant for lats undergo extensive proliferation and form large tumours in many tissues in mosaic adults. Homozygous mutants for various lats alleles display a range of developmental defects including embryonic lethality. Although many tumour suppressors have been identified in Drosophila melanogaster, it is not clear whether these fly genes are directly relevant to tumorigenesis in mammals. Here, we have isolated mammalian homologues of Drosophila lats. Human LATS1 suppresses tumour growth and rescues all developmental defects, including embryonic lethality in flies. In mammalian cells, LATS1 is phosphorylated in a cell-cycle-dependent manner and complexes with CDC2 in early mitosis. LATS1-associated CDC2 has no mitotic cyclin partner and no kinase activity for histone H1. Furthermore, lats mutant cells in Drosophila abnormally accumulate cyclin A. These biochemical observations indicate that LATS is a novel negative regulator of CDC2/cyclin A, a finding supported by genetic data in Drosophila demonstrating that lats specifically interacts with cdc2 and cyclin A.