Biomolecular condensates have been proposed to mediate cellular signaling transduction. However, the mechanism and functional consequences of signal condensates are not well understood. Here we report that LATS2, the core kinase of the Hippo pathway, responds to F-actin cytoskeleton reduction and forms condensates. The proline-rich motif (PRM) of LATS2 mediates its condensation. LATS2 partitions with the main components of the Hippo pathway to assemble a signalosome for LATS2 activation and for its stability by physically compartmentalizing from E3 ligase FBXL16 complex-dependent degradation, which in turn mediates yes-associated protein (YAP)–transcriptional coactivator with PDZ-binding motif (TAZ) recruitment and inactivation. This oncogenic FBXL16 complex blocks LATS2 condensation by binding to the PRM region to promote its degradation. Disruption of LATS2 condensation leads to tumor progression. Thus, our study uncovers that the signalosomes assembled by LATS2 condensation provide a compartmentalized and reversible platform for Hippo signaling transduction and protein stability, which have potential implications in cancer diagnosis and therapeutics.