Loss of Hippo signaling in Drosophila leads to tissue overgrowth as a result of increased cell proliferation and decreased cell death. YAP (a homolog of Drosophila Yorkie and target of the Hippo pathway) was recently implicated in control of organ size, epithelial tissue development, and tumorigenesis in mammals. However, the role of the mammalian Hippo pathway in such regulation has remained unclear. We now show that mice with liver-specific ablation of WW45 (a homolog of Drosophila Salvador and adaptor for the Hippo kinase) manifest increased liver size and expansion of hepatic progenitor cells (oval cells) and eventually develop hepatomas. Moreover, ablation of WW45 increased the abundance of YAP and induced its localization to the nucleus in oval cells, likely accounting for their increased proliferative capacity, but not in hepatocytes. Liver tumors that developed in mice heterozygous for WW45 deletion or with liver-specific WW45 ablation showed a mixed pathology combining characteristics of hepatocellular carcinoma and cholangiocarcinoma and seemed to originate from oval cells. Together, our results suggest that the mammalian Hippo–Salvador pathway restricts the proliferation of hepatic oval cells and thereby controls liver size and prevents the development of oval cell–derived tumors.