BackgroundThe Hippo pathway plays a critical role in controlled cell proliferation. The tumor suppressor Merlin and large tumor suppressor kinase 1 (LATS1) mediate activation of Hippo pathway, consequently inhibiting the primary effectors, Yes-associated protein (YAP) and transcriptional coactivator with PDZ-binding motif (TAZ). Phosphatidylinositol 4,5-bisphosphate (PIP2), a lipid present in the plasma membrane (PM), binds to and activates Merlin. Phosphatidylinositol 4-phosphate 5-kinase α (PIP5Kα) is an enzyme responsible for PIP2 production. However, the functional role of PIP5Kα in regulation of Merlin and LATS1 under Hippo signaling conditions remains unclear.MethodsPIP5Kα, Merlin, or LATS1 knockout or knockdown cells and transfected cells with them were used. LATS1, YAP, and TAZ activities were measured using biochemical methods and PIP2 levels were evaluated using cell imaging. Low/high cell density and serum starvation/stimulation conditions were tested. Colocalization of PIP5Kα and PIP2 with Merlin and LATS1, and their protein interactions were examined using transfection, confocal imaging, immunoprecipitation, western blotting, and/or pull-down experiments. Colony formation and adipocyte differentiation assays were performed.ResultsWe found that PIP5Kα induced LATS1 activation and YAP/TAZ inhibition in a kinase activity-dependent manner. Consistent with these findings, PIP5Kα suppressed cell proliferation and enhanced adipocyte differentiation of mesenchymal stem cells. Moreover, PIP5Kα protein stability and PIP2 levels were elevated at high cell density compared with those at low cell density, and both PIP2 and YAP phosphorylation levels initially declined, then recovered upon serum stimulation. Under these conditions, YAP/TAZ activity was aberrantly regulated by PIP5Kα deficiency. Mechanistically, either Merlin deficiency or LATS1 deficiency abrogated PIP5Kα-mediated YAP/TAZ inactivation. Additionally, the catalytic domain of PIP5Kα directly interacted with the band 4.1/ezrin/radixin/moesin domain of Merlin, and this interaction reinforced interaction of Merlin with LATS1. In accordance with these findings, PIP5Kα and PIP2 colocalized with Merlin and LATS1 in the PM. In PIP5Kα-deficient cells, Merlin colocalization with PIP2 was reduced, and LATS1 solubility increased.ConclusionsCollectively, our results support that PIP5Kα serves as an activator of the Hippo pathway through interaction and colocalization with Merlin, which promotes PIP2-dependent Merlin activation and induces local recruitment of LATS1 to the PIP2-rich PM and its activation, thereby negatively regulating YAP/TAZ activity.Video AbstractSupplementary InformationThe online version contains supplementary material available at 10.1186/s12964-023-01161-w.