TNFAIP8 is associated with prognosis of several human malignancies. However, the molecular mechanism of TNFAIP8 in lung cancer remains unknown. In our study, we found TNFAIP8 could enhance TEAD luciferase activity and inhibits the activity of Hippo pathway. TNFAIP8 also increased cyclin D1, CDK6, and decreased p27 in lung cancer cells. In addition, TNFAIP8 increased total YAP protein and promoted nuclear localization of YAP. More importantly, YAP depletion blocked the role of TNFAIP8 on cell cycle-related proteins and TEAD luciferase activity, revealing that TNFAIP8 regulates Hippo pathway in a YAP-dependend manner. Further experiments identified that TNFAIP8 depletion enhanced LATS1 phosphorylation and TNFAIP8 overexpression decreased phosphorylated LAST1 level. LATS1 siRNA treatment reversed the effects of TNFAIP8 plasmid or siRNA on cell cycle proteins. Besides, immunofluorescence and co-immunoprecipitation demonstrated the interaction between TNFAIP8 and LATS1 in H460 and H1299 cells, suggesting that TNFAIP8 regulates Hippo signaling through its interaction with LATS1. Colony formation assays and transwell assays showed that YAP or LATS1 depletion reversed the positive effect of TNFAIP8 on cell proliferation and invasion. TNFAIP8 overexpression could increase MMP-7 and TNFAIP8 depletion could decrease MMP-7 at both protein and mRNA levels, without significant changes of E-cadherin, N-cadherin, and Vimentin. Collectively, the present study provides a novel finding that TNFAIP8 regulates Hippo pathway through interacting with LATS1 to promote cell proliferation and invasion in lung cancer. TNFAIP8 may serve as a candidate biomarker for poor prognosis and a target for new therapies.