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Diabetes results from a decline in functional pancreatic β-cells, but the molecular mechanisms underlying the pathological β-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 β-cell apoptosis and impaired function. LATS2 deficiency in β-cells and primary isolated human islets as well as β-cell specific LATS2 ablation in mice improves β-cell viability, insulin secretion and β-cell mass and ameliorates diabetes development. LATS2 activates mechanistic target of rapamycin complex 1 (mTORC1), a physiological suppressor of autophagy, in β-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 β-cell apoptosis triggered by impaired autophagy suggesting an existence of a stress-sensitive multicomponent cellular loop coordinating β-cell compensation and survival. Our data reveal an important role for LATS2 in pancreatic β-cell turnover and suggest LATS2 as a potential therapeutic target to improve pancreatic β-cell survival and function in diabetes.