Ustilago maydis causes common smut in maize, which is characterized by tumor formation in aerial parts of the host. Tumors result from the de novo cell division of highly developed bundle sheath and subsequent cell enlargement. However, the molecular mechanisms underlying tumorigenesis are still largely unknown. Here, we characterize the U. maydis effector Sts2 (Small tumor on seedlings 2), which promotes the division of hyperplasia tumor cells. Upon infection, Sts2 is translocated into the maize cell nucleus, where it acts as a transcriptional activator, and the transactivation activity is crucial for its virulence function. Sts2 interacts with ZmNECAP1, a yet undescribed plant transcriptional activator, and it activates the expression of several leaf developmental regulators to potentiate tumor formation. Contrary, fusion of a suppressive SRDX-motif to Sts2 causes dominant negative inhibition of tumor formation, underpinning the central role of Sts2 for tumorigenesis. Our results not only disclose the virulence mechanism of a tumorigenic effector, but also reveal the essential role of leaf developmental regulators in pathogen-induced tumor formation.