Intestinal homeostasis is tightly regulated by complex yet poorly understood signaling networks. Here, we demonstrate that Lats1/2, the core Hippo kinases, are essential to maintain Wnt pathway activity and intestinal stem cells. Lats1/2 deletion leads to loss of intestinal stem cells but drives Wnt-uncoupled crypt expansion. To explore the function of downstream transcriptional enhanced associate domain (TEAD) transcription factors, we identified a selective small-molecule reversible inhibitor of TEAD auto-palmitoylation that directly occupies its lipid-binding site and inhibits TEAD-mediated transcription in vivo. Combining this chemical tool with genetic and proteomics approaches, we show that intestinal Wnt inhibition by Lats deletion is Yes-associated protein (YAP)/transcriptional activator with PDZ-binding domain (TAZ) dependent but TEAD independent. Mechanistically, nuclear YAP/TAZ interact with Groucho/Transducin-Like Enhancer of Split (TLE) to block Wnt/T-cell factor (TCF)-mediated transcription, and dual inhibition of TEAD and Lats suppresses Wnt-uncoupled Myc upregulation and epithelial over-proliferation in Adenomatous polyposis coli (APC)-mutated intestine. Our studies highlight a pharmacological approach to inhibit TEAD palmitoylation and have important implications for targeting Wnt and Hippo signaling in human malignancies. Display omitted •Lats1/2 kinases are required to sustain Wnt pathway and intestinal stem cells•Identification of a TEAD auto-palmitoylation inhibitor enables in vivo analysis•Nuclear YAP/TAZ interact with Groucho/TLE to block TCF-mediated transcription•Dual inhibition of TEAD and Lats suppresses Myc in APC-mutated intestine Li et al. identify a key role of Lats1/2 kinases during intestinal homeostasis for maintaining Wnt pathway activity and intestinal stem cells. Using a selective small-molecule inhibitor of TEAD auto-palmitoylation, they reveal both TEAD-dependent and independent transcriptional regulation downstream of YAP/TAZ in intestinal epithelium.