Defective expression of LATS2, a negative regulator of YAP oncoprotein, has been reported in cancer of prostate, breast, liver, brain, and blood origins. However, no transcriptional regulators for the LATS2 gene have been identified. Here we report that spontaneous mutation of the transcription factor FOXP3 reduces expression of the LATS2 gene in mammary epithelial cells. shRNA-mediated silencing of FOXP3 in normal or malignant mammary epithelial cells of mouse and human origin repressed LATS2 expression and increased YAP protein levels. LATS2 induction required binding of FOXP3 to a specific sequence in the LATS2 promoter, and this interaction contributed to FOXP3-mediated growth inhibition of tumor cells. In support of these results, reduced expression and somatic mutations of FOXP3 correlated strongly with defective LATS2 expression in micro-dissected prostate cancer tissues. Thus, defective expression of LATS2 is attributable to FOXP3 defects and may be a major independent determinant of YAP protein elevation in cancer. Our findings identify a novel mechanism of LATS2 downregulation in cancer and reveal an important tumor suppressor relay between the FOXP3 and HIPPO pathways which are widely implicated in human cancer. ©2011 AACR.