High expression levels of CD44 and YAP have been identified as poor prognostic factors in hepatocellular carcinoma (HCC). However, the mechanistic relationship between CD44 and YAP during HCC tumorigenesis remains largely unknown. To investigate the mutual regulation between standard CD44 (CD44S) and YAP1 in HCC cell lines and tissue samples, CD44S and YAP1 expression in 40 pairs of tumor samples and matched distal normal tissues from HCC patients was examined by immunohistochemical staining. High expression of either CD44S or YAP1 was associated with a younger age and worse pathology grade. In addition, high levels of CD44S and YAP1 were associated with increased vascular invasion and more severe liver cirrhosis, respectively. CD44S expression was positively correlated with YAP1 expression in these HCC tissues. In vitro experiments suggested that CD44S could positively regulate the expression of YAP1 and its target genes via the PI3K/Akt pathway in HCC cells. Moreover, CD44S is regulated by the YAP1/TEAD axis. These results reveal a novel positive feedback loop involving CD44S and YAP1, in which CD44S functions as both an upstream regulator and a downstream effector of YAP1 in HCC. This feedback loop might constitute a broadly conserved module for regulating cell proliferation and invasion during HCC tumorigenesis. Blocking this positive feedback loop that involves CD44S and YAP1 might represent a new approach for HCC treatment.