Diabetes is characterized by dysfunction and loss of beta-cells, and promoting beta-cell survival is of therapeutic interest. Here the authors show that Large-tumor suppressor 2 (LATS2), a core component of the Hippo signaling pathway, induces beta-cell failure through mTORC1 hyperactivation and autophagic flux suppression. Diabetes results from a decline in functional pancreatic beta-cells, but the molecular mechanisms underlying the pathological beta-cell failure are poorly understood. Here we report that large-tumor suppressor 2 (LATS2), a core component of the Hippo signaling pathway, is activated under diabetic conditions and induces beta-cell apoptosis and impaired function. LATS2 deficiency in beta-cells and primary isolated human islets as well as beta-cell specific LATS2 ablation in mice improves beta-cell viability, insulin secretion and beta-cell mass and ameliorates diabetes development. LATS2 activates mechanistic target of rapamycin complex 1 (mTORC1), a physiological suppressor of autophagy, in beta-cells and genetic and pharmacological inhibition of mTORC1 counteracts the pro-apoptotic action of activated LATS2. We further show a direct interplay between Hippo and autophagy, in which LATS2 is an autophagy substrate. On the other hand, LATS2 regulates beta-cell apoptosis triggered by impaired autophagy suggesting an existence of a stress-sensitive multicomponent cellular loop coordinating beta-cell compensation and survival. Our data reveal an important role for LATS2 in pancreatic beta-cell turnover and suggest LATS2 as a potential therapeutic target to improve pancreatic beta-cell survival and function in diabetes.