The Hippo signaling pathway converges on YAP to regulate growth, differentiation, and regeneration. Previous studies with overexpressed proteins have shown that YAP is phosphorylated by its upstream kinase, Lats1/2, on multiple sites, including an evolutionarily conserved 14-3-3-binding site whose phosphorylation is believed to inhibit YAP by excluding it from the nucleus. Indeed, nuclear localization of YAP or decreased YAP phosphorylation at this site (S168 in Drosophila, S127 in humans, and S112 in mice) is widely used in current literature as a surrogate of YAP activation even though the physiological importance of this phosphorylation event in regulating endogenous YAP activity has not been defined. Here we address this question by introducing a YapS112A knock-in mutation in the endogenous Yap locus. The YapS112A mice are surprisingly normal despite nuclear localization of the mutant YAP protein in vivo and profound defects in cytoplasmic translocation in vitro. Interestingly, the mutant YapS112A mice show a compensatory decrease in YAP protein levels due to increased phosphorylation at a mammalian-specific phosphodegron site on YAP. These findings reveal a robust homeostatic mechanism that maintains physiological levels of YAP activity and caution against the assumptive use of YAP localization alone as a surrogate of YAP activity.