The Dpp and Fat-Hippo signaling pathways both regulate growth in Drosophila. Dpp is a BMP family ligand and acts via a Smad family DNA-binding transcription factor, Mad. Fat-Hippo signaling acts via a non-DNA-binding transcriptional coactivator protein, Yorkie. Here, we show that these pathways are directly interlinked. They act synergistically to promote growth, in part via regulation of the microRNA gene bantam, and their ability to promote growth is mutually dependent. Yorkie and Mad physically bind each other, and we identify a 410 bp minimal enhancer of bantam that responds to Yorkie:Mad in vivo and in cultured cells, and show that both Yorkie and Mad associate with this enhancer in vivo. Our results indicate that in promoting the growth of Drosophila tissues, Fat-Hippo and Dpp signaling contribute distinct subunits of a shared transcriptional activation complex, Yorkie:Mad.