The androgen receptor (AR) is a member of the steroid receptor superfamily that plays critical roles in the development and maintenance of the male reproductive system and in prostate cancer. Actions of AR are controlled by interaction with several classes of coregulators. In this study, we have identified LATS2/KPM as a novel AR-interacting protein. Human LATS1 and LATS2 are tumor suppressors that are homologues of Drosophila warts/lats. The interaction surface of LATS2 is mapped to the central region of the protein while the AR LBD is sufficient for this interaction. LATS2 functions as a modulator of AR by inhibiting androgen-regulated gene expression. The mechanism of LATS2 mediated repression of AR activity appears to involve the inhibition of AR NH₂- and COOH-terminal (N/C) interaction. Chromatin immunoprecipitation assays in human prostate carcinoma cells reveal that LATS2 and AR are present in the protein complex that binds at the promoter and enhancer regions of prostate specific antigen (PSA), and overexpression of LATS2 results in a reduction in androgen induced expression of endogenous PSA mRNA. Immunohistochemistry shows that LATS2 and AR are localized within the prostate epithelium and that LATS2 expression is lower in human prostate tumor samples than in normal prostate. The results suggest that LATS2 may play a role in AR-mediated transcription and contribute to the development of prostate cancer.