The tumor suppressor Merlin/NF2, a key activator of the Hippo pathway in growth control, is regulated by phosphorylation. However, it is uncertain whether additional post-translational modifications regulate Merlin. Here, we show that ubiquitination is required to activate Merlin in the Hippo pathway. Ubiquitinated Merlin is mostly conjugated by one or two ubiquitin molecules. Such modification is promoted by serine 518 dephosphorylation in response to Ca(2+)signaling or cell detachment. Merlin ubiquitination is mediated by the E3 ubiquitin ligase,NEDD4L, which requires a scaffold protein,AMOTL1, to approach Merlin. SeveralNF2-patient-derived Merlin mutations disrupt its binding toAMOTL1 and its regulation by theAMOTL1-NEDD4L apparatus. Lysine (K) 396 is the major ubiquitin conjugation residue. Disruption of Merlin ubiquitination by the K396R mutation orNEDD4L depletion diminishes its binding to Lats1 and inhibits Lats1 activation. These effects are also accompanied by loss of Merlin's anti-mitogenic and tumor suppressive properties. Thus, we propose that dephosphorylation and ubiquitination compose an intramolecular relay to activate Merlin functions in activating the Hippo pathway during growth control.