TEAD transcription factors are responsible for the transcriptional output of Hippo signalling1,2. TEAD activity is primarily regulated by phosphorylation of its coactivators YAP and TAZ3,4. In addition, cysteine palmitoylation has recently been shown to regulate TEAD activity5,6. Here, we report lysine long-chain fatty acylation as a novel posttranslational modification of TEADs. Lysine fatty acylation occurs spontaneously via intramolecular transfer of acyl groups from the proximal acylated cysteine residue. Lysine fatty acylation, like cysteine palmitoylation, contributes to the transcriptional activity of TEADs by enhancing the interaction with YAP and TAZ, but it is more stable than cysteine acylation, suggesting that the lysine fatty-acylated TEAD acts as a “stable active form”. Significantly, lysine fatty acylation of TEAD increased upon Hippo signalling activation, despite a decrease in cysteine acylation. Our results provide new insight into the role of fatty acyl modifications in the regulation of TEAD activity.