Actin cytoskeletal damage induces inactivation of the oncoprotein YAP (Yes‐associated protein). It is known that the serine/threonine kinase LATS (large tumour suppressor) inactivates YAP by phosphorylating its Ser127 and Ser381 residues. However, the events downstream of actin cytoskeletal changes that are involved in the regulation of the LATS–YAP pathway and the mechanism by which LATS differentially phosphorylates YAP on Ser127 and Ser381 in vivo have remained elusive. Here, we show that cyclic AMP (cAMP)‐dependent protein kinase (PKA) phosphorylates LATS and thereby enhances its activity sufficiently to phosphorylate YAP on Ser381. We also found that PKA activity is involved in all contexts previously reported to trigger the LATS–YAP pathway, including actin cytoskeletal damage, G‐protein‐coupled receptor activation, and engagement of the Hippo pathway. Inhibition of PKA and overexpression of YAP cooperate to transform normal cells and amplify neural progenitor pools in developing chick embryos. We also implicate neurofibromin 2 as an AKAP (A‐kinase‐anchoring protein) scaffold protein that facilitates the function of the cAMP/PKA–LATS–YAP pathway. Our study thus incorporates PKA as novel component of the Hippo pathway.