Primary human cells can be transformed into tumor cells by a defined set of genetic alterations including telomerase, oncogenic Ras^V12, and the tumor suppressors p53 and pRb. SV40 small T (ST) is required for anchorage-independent growth in vitro and in vivo. Here, we identify the Hippo tumor suppressor pathway as a critical target of ST in cellular transformation. We report that ST uncouples YAP from the inhibitory activity of the Hippo pathway through PAK1-mediated inactivation of NF2. Membrane-tethered activated PAK is sufficient to bypass the requirement for ST in anchorage-independent growth. PAK acts via YAP to mediate the transforming effects of ST. Activation of endogenous YAP is required for ST-mediated transformation and is sufficient to bypass ST in anchorage-independent growth and xenograft tumor formation. Our findings uncover the Hippo tumor suppressor pathway as a final gatekeeper to transformation and tumorigenesis of primary cells.