The Hippo pathway is comprised of a kinase cascade that involves mammalian Ste20-like serine/threonine kinases (MST1/2) and large tumor suppressor kinases (LATS1/2) and leads to inactivation of transcriptional coactivator with PDZ-binding motif (TAZ) and yes-associated protein (YAP). Protein stability and subcellular localization of TAZ/YAP determine its ability to regulate a diverse array of biological processes, including proliferation, apoptosis, differentiation, stem/progenitor cell properties, organ size control, and tumorigenesis. These actions are enabled by interactions with various transcription factors or through cross talk with other signaling pathways. Interestingly, mechanical stress has been shown to be an upstream regulator of TAZ/YAP activity, and this finding provides a novel clue for understanding how mechanical forces influence a broad spectrum of biological processes, which involve cytoskeletal structure, cell adhesion, and extracellular matrix (ECM) organization. Transforming growth factor-β (TGF-β) pathway is a critical component of lung development and the progression of lung diseases including emphysema, fibrosis, and cancer. In addition, TGF-β is a key regulator of ECM remodeling and cell differentiation processes such as epithelial-mesenchymal transition. In this review, we summarize the current knowledge of the Hippo pathway regarding lung development and diseases, with an emphasis on its interplay with TGF-β signaling.