Hippo signaling controls organ size by regulating cell proliferation and apoptosis. Yes-associated protein (YAP) is a key downstream effector of Hippo signaling, and LATS-mediated phosphorylation of YAP at Ser127 inhibits its nuclear localization and transcriptional activity. Here, we report that Nemo-like kinase (NLK) phosphorylates YAP at Ser128 both in vitro and in vivo, which blocks interaction with 14-3-3 and enhances its nuclear localization. Depletion of NLK increases YAP phosphorylation at Ser127 and reduces YAP-mediated reporter activity. These results suggest that YAP phosphorylation at Ser128 and at Ser127 may be mutually exclusive. We also find that with the increase in cell density, nuclear localization and the level of NLK are reduced, resulting in reduction in YAP phosphorylation at Ser128. Furthermore, knockdown of Nemo (the Drosophila NLK) in fruit fly wing imaginal discs results in reduced expression of the Yorkie (the Drosophila YAP) target genes expanded and DIAP1, while Nemo overexpression reciprocally increased the expression. Overall, our data suggest that NLK/Nemo acts as an endogenous regulator of Hippo signaling by controlling nuclear localization and activity of YAP/Yorkie.