The Hippo signaling pathway is a master regulator of organ growth, tissue homeostasis, and tumorigenesis. The activity of the Hippo pathway is controlled by various upstream components, including Expanded (Ex), but the precise molecular mechanism of how Ex is regulated remains poorly understood. Here we identify Plenty of SH3s (POSH), an E3 ubiquitin ligase, as a key component of Hippo signaling in Drosophila. POSH overexpression synergizes with loss of Kibra to induce overgrowth and up-regulation of Hippo pathway target genes. Furthermore, knockdown of POSH impedes dextran sulfate sodium-induced Yorkie-dependent intestinal stem cell renewal, suggesting a physiological role of POSH in modulating Hippo signaling. Mechanistically, POSH binds to the C-terminal of Ex and is essential for the Crumbs-induced ubiquitination and degradation of Ex. Our findings establish POSH as a crucial regulator that integrates the signal from the cell surface to negatively regulate Ex-mediated Hippo activation in Drosophila.