Tissue homeostasis requires the production of newly differentiated cells from resident adult stem cells. Central to this process is the expansion of undifferentiated intermediates known as transit-amplifying (TA) cells, but how stem cells are triggered to enter this proliferative TA state remains an important open question. Using the continuously growing mouse incisor as a model of stem cell-based tissue renewal, we found that the transcriptional cofactors YAP and TAZ are required both to maintain TA cell proliferation and to inhibit differentiation. Specifically, we identified a pathway involving activation of integrin α3 in TA cells that signals through an LATS-independent FAK/CDC42/PP1A cascade to control YAP-S397 phosphorylation and nuclear localization. This leads to Rheb expression and potentiates mTOR signaling to drive the proliferation of TA cells. These findings thus reveal a YAP/TAZ signaling mechanism that coordinates stem cell expansion and differentiation during organ renewal.