A small population of cancer cells called cancer-initiating cells or cancer stem cells (CSCs) are involved in drug resistance, metastasis, and cancer relapse. Finding pathways that regulate CSC is very important for clinical therapy. ATP-binding cassette sub-family G member 2 (ABCG2) plays a role in side population (SP) cell formation and contributes to chemotherapy resistance in common forms of cancer. Yes-associated protein 1 (YAP1) is a major transcriptional effector of the Hippo pathway, which plays important roles in organ size control and tumorigenesis. In this study, we found ABCG2 and YAP1 were both overexpressed in lung cancer SP cells. Disruption of YAP1 expression by siRNA attenuated the expression of ABCG2 transcript and significantly reduced the percentage of SP cells and sphere formation in lung cancer cells. Overexpression of YAP1 in lung cancers led to an increase in ABCG2 expression and increased the percentage of SP cells. However, overexpression of YAP1 in purified non-SP cells did not increase ABCG2 expression and the percentage of SP cells, which may be due to the inhibition of YAP activity through phosphorylation. YAP1 directly transcriptionally regulated ABCG2 by binding to the promoter of ABCG2. Moreover, the YAP1 inhibitor verteporfin and YAP1 siRNA downregulated ABCG2 level through inhibition of YAP1 in lung cancer cells and sensitized them to the chemotherapy drug doxorubicin. Our study adds a new function for YAP1 that may be relevant to drug resistance and cancer therapy through regulation of ABCG2 and side population cell formation in lung cancer.