Mps One Binder Kinase Activator (MOB)1A/1B are core components of the Hippo pathway. These proteins, which coactivate LArge Tumour Suppressor homologue kinases, are also tumour suppressors. To investigate MOB1A/B's roles in normal physiology and lung cancer, we generated doxycycline (Dox)-inducible, bronchioalveolar epithelium-specific, null mutations of MOB1A/B in mice (SPC-rtTA/(tetO)7-Cre/Mob1aflox/flox/Mob1b-/-; termed luMob1DKO mice). Most mutants (70%) receiving Dox in utero (luMob1DKO (E6.5-18.5) mice) died of hypoxia within 1 h post-birth. Their alveolar epithelial cells showed increased proliferation, impaired YAP1/TAZ-dependent differentiation and decreased surfactant protein production, all features characteristic of human respiratory distress syndrome. Intriguingly, mutant mice that received Dox postnatally (luMob1DKO (P21-41) mice) did not develop spontaneous lung adenocarcinomas, and urethane treatment-induced lung tumour formation was decreased (rather than increased). Lungs of luMob1DKO (P21-41) mice exhibited increased detachment of bronchiolar epithelial cells and decreased numbers of the bronchioalveolar stem cells thought to initiate lung adenocarcinomas. YAP1/TAZ-NKX2.1-dependent expression of collagen XVII, a key hemidesmosome component, was also reduced. Thus, a MOB1-YAP1/TAZ-NKX2.1 axis is essential for normal lung homeostasis and expression of the collagen XVII protein necessary for alveolar stem cell maintenance in the lung niche.