Runt-related transcription factor 3 (RUNX3) is a well-documented tumour suppressor that is frequently inactivated in gastric cancer. Here, we define a novel mechanism by which RUNX3 exerts its tumour suppressor activity involving the TEAD-YAP complex, a potent positive regulator of proliferative genes. We report that the TEAD-YAP complex is not only frequently hyperactivated in liver and breast cancer, but also confers a strong oncogenic activity in gastric epithelial cells. The increased expression of TEAD-YAP in tumour tissues significantly correlates with poorer overall survival of gastric cancer patients. Strikingly, RUNX3 physically interacts with the N-terminal region of TEAD through its Runt domain. This interaction markedly reduces the DNA-binding ability of TEAD that attenuates the downstream signalling of TEAD-YAP complex. Mutation of RUNX3 at Arginine 122 to Cysteine, which was previously identified in gastric cancer, impairs the interaction between RUNX3 and TEAD. Our data reveal that RUNX3 acts as a tumour suppressor by negatively regulating the TEAD-YAP oncogenic complex in gastric carcinogenesis.