Cell–cell adhesion protein αE-catenin inhibits skin squamous cell carcinoma (SCC) development; however, the mechanisms responsible for this function are not completely understood. We report here that αE-catenin inhibits β4 integrin-mediated activation of SRC tyrosine kinase. SRC is the first discovered oncogene, but the protein substrate critical for SRC-mediated transformation has not been identified. We found that YAP1, the pivotal effector of the Hippo signaling pathway, is a direct SRC phosphorylation target, and YAP1 phosphorylation at three sites in its transcription activation domain is necessary for SRC–YAP1-mediated transformation. We uncovered a marked increase in this YAP1 phosphorylation in human and mouse SCC tumors with low/negative expression of αE-catenin. We demonstrate that the tumor suppressor function of αE-catenin involves negative regulation of the β4 integrin–SRC signaling pathway and that SRC-mediated phosphorylation and activation of YAP1 are an alternative to the canonical Hippo signaling pathway that directly connect oncogenic tyrosine kinase signaling with YAP1.