The Drosophila transcription factor Cabut/dTIEG (Cbt) is a growth regulator, whose expression is modulated by different stimuli. Here, we determine Cbt association with chromatin and identify Yorkie (Yki), the transcriptional co-activator of the Hippo (Hpo) pathway as its partner. Cbt and Yki co-localize on common gene promoters, and the expression of target genes varies according to changes in Cbt levels. Down-regulation of Cbt suppresses the overgrowth phenotypes caused by mutations in expanded (ex) and yki overexpression, whereas its up-regulation promotes cell proliferation. Our results imply that Cbt is a novel partner of Yki that is required as a transcriptional co-activator in growth control.