Hippo signaling is a tumor suppressive signaling pathway that controls organ size by regulating cellular proliferation, apoptosis, and differentiation during development, regeneration, and homeostasis. The Hippo pathway inhibits transcriptional co-activators and Hippo pathway effectors YAP/TAZ, activation of which is often seen in cancer. Within the adult mammalian intestine, homeostasis of which requires intricate reciprocal interaction between the gut epithelium and adjacent mesenchyme, the Hippo-YAP pathway is crucial for intestinal epithelial homeostasis and regeneration. However, its role in adult mesenchymal homeostasis remains poorly understood. Here, I genetically dissect the role of mesenchymal Hippo-YAP signaling in adult intestinal homeostasis. I find that deletion of core kinases LATS1/2 or YAP activation in mesenchymal progenitor cells, but not terminally differentiated cells, disrupts signaling in the stem cell niche and mesenchymal homeostasis by inducing mesenchymal overgrowth and suppressing smooth muscle actin expression. Furthermore, inhibition of Hippo signaling in Gli1+ mesenchymal progenitors, the main source of Wnt ligands within the stem cell niche, stimulates Wnt ligand production and subsequent epithelial Wnt pathway activation, thereby driving epithelial regeneration following DSS-mediated injury as well as exacerbating APC-mediated tumorigenesis. Altogether, our data reveal a previously underappreciated requirement and the underlying mechanism for stromal Hippo-YAP signaling in adult intestinal homeostasis.