Epithelial organ size and shape depend on cell shape changes, cell-matrix communication, and apical membrane growth. The Drosophila melanogaster embryonic tracheal network is an excellent model to study these processes. Here, we show that the transcriptional coactivator of the Hippo pathway, Yorkie (YAP/TAZ in vertebrates), plays distinct roles in the developing Drosophila airways. Yorkie exerts a cytoplasmic function by binding Drosophila Twinstar, the orthologue of the vertebrate actin-severing protein Cofilin, to regulate F-actin levels and apical cell membrane size, which are required for proper tracheal tube elongation. Second, Yorkie controls water tightness of tracheal tubes by transcriptional regulation of the δ-aminolevulinate synthase gene (Alas). We conclude that Yorkie has a dual role in tracheal development to ensure proper tracheal growth and functionality.