Homeostasis in the Drosophila midgut is maintained by stem cells [1, 2]. The intestinal epithelium contains two types of differentiated cells that are lost and replenished: enteroendocrine (EE) cells and enterocytes (ECs). Intestinal stem cells (ISCs) are the only cells in the adult midgut that proliferate [3, 4], and ISC divisions give rise to an ISC and an enteroblast (EB), which differentiates into an EC or an EE cell [3–5]. If the midgut epithelium is damaged, then ISC proliferation increases [6–12]. Damaged ECs express secreted ligands (Unpaired proteins) that activate Jak-Stat signaling in ISCs and EBs to promote their proliferation and differentiation [7, 9, 13, 14]. We show that the Hippo pathway components Warts and Yorkie mediate a transition from low- to high-level ISC proliferation to facilitate regeneration. The Hippo pathway regulates growth in diverse organisms and has been linked to cancer [15, 16]. Yorkie is activated in ECs in response to tissue damage or activation of the damage-sensing Jnk pathway. Activation of Yorkie promotes expression of unpaired genes and triggers a nonautonomous increase in ISC proliferation. Our observations uncover a role for Hippo pathway components in regulating stem cell proliferation and intestinal regeneration.