The conserved Hippo tumor suppressor pathway is a key signaling pathway that controls organ size in Drosophila. To date a signal transduction cascade from the Cadherin Fat at the plasma membrane into the nucleus has been discovered. However, how the Hippo pathway is regulated by extracellular signals is poorly understood. Fat not only regulates growth but also planar cell polarity, for which it interacts with the Dachsous (Ds) Cadherin, and Four-jointed (Fj), a transmembrane kinase that modulates the interaction between Ds and Fat. Ds and Fj are expressed in gradients and manipulation of their expression causes abnormal growth. However, how Ds and Fj regulate growth and whether they act through the Hippo pathway is not known. Here, we report that Ds and Fj regulate Hippo signaling to control growth. Interestingly, we found that Ds/Fj regulate the Hippo pathway through a remarkable logic. Induction of Hippo target genes is not proportional to the amount of Ds or Fj presented to a cell, as would be expected if Ds and Fj acted as traditional ligands. Rather, Hippo target genes are up-regulated when neighboring cells express different amounts of Ds or Fj. Consistent with a model that differences in Ds/Fj levels between cells regulate the Hippo pathway, we found that artificial Ds/Fj boundaries induce extra cell proliferation, whereas flattening the endogenous Ds and Fj gradients results in growth defects. The Ds/Fj signaling system thus defines a cell-to-cell signaling mechanism that regulates the Hippo pathway, thereby contributing to the control of organ size.