The Hippo (Hpo) kinase cascade restricts tissue growth by inactivating the transcriptional coactivator Yorkie (Yki), which regulates the expression of target genes such as the cell death inhibitor diap1 by unknown mechanisms. Here we identify the TEAD/TEF family protein Scalloped (Sd) as a DNA-binding transcription factor that partners with Yki to mediate the transcriptional output of the Hpo growth-regulatory pathway. The diap1 (th) locus harbors a minimal Sd-binding Hpo Responsive Element (HRE) that mediates transcriptional regulation by the Hpo pathway. Sd binds directly to Yki, and a Yki missense mutation that abrogates Sd-Yki binding also inactivates Yki function in vivo. We further demonstrate that sd is required for yki-induced tissue overgrowth and target gene expression, and that sd activity is conserved in its mammalian homolog. Our results uncover a heretofore missing link in the Hpo signaling pathway and provide a glimpse of the molecular events on a Hpo-responsive enhancer element.