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Background Aberrant activation of β-catenin and Yes-associated protein (YAP) signaling pathways has been associated with hepatocellular carcinoma (HCC) progression. The LIM domain protein Ajuba regulates β-catenin and YAP signaling and is implicated in tumorigenesis. However, roles and mechanism of Ajuba expression in HCC cells remain unclear. The E3 ligase Hakai has been shown to interact with other Ajuba family members and whether Hakai interacts and regulates Ajuba is unknown. Methods HCC cell lines stably depleted of Ajuba or Hakai were established using lentiviruses expressing shRNAs against Ajuba or Hakai. The effects of Ajuba on HCC cells were determined by a number of cell-based analyses including anchorage-independent growth, three dimension cultures and trans-well invasion assay. In vivo tumor growth was determined in a xenograft model and Ajuba expression in tumor sections was examined by immunohistochemistry. Co-immunoprecipitation, confocal microscopy and immunoblot assay were used to examine the expression and interaction between Ajuba and Hakai. Results Depletion of Ajuba in HCC cells significantly enhanced anchorage-independent growth, invasion, the formation of spheroids and tumor growth in a xenograft model, suggesting a tumor suppressor function for Ajuba in HCC. Mechanistically, Ajuba depletion triggered E-cadherin loss and β-catenin translocation with increased Cyclin D1 levels. In addition, depletion of Ajuba upregulated the levels of YAP and its target gene CYR61. Furthermore, siRNA-mediated knockdown of either β-catenin or YAP attenuated the pro-tumor effects by Ajuba depletion on HCC cells. Notably, Ajuba stability in HCC cells was regulated by Hakai, an E3 ligase for E-cadherin. Hakai interacted with Ajuba via its HYB domain and induced Ajuba neddylation, which was antagonized by the neddylation inhibitor, MLN4924, but not MG132. We further show that overexpression of Hakai in HCC cells markedly increased anchorage-independent growth, spheroid-formation ability and tumor growth in xenografts whereas Hakai depletion resulted in these opposite effects, indicating an oncogenic role for Hakai in HCC. Hakai also induced β-catenin translocation with increased levels of Cyclin D1. Conclusions Our data suggest a role for Ajuba and Hakai in HCC, and uncover the mechanism underlying the regulation of Ajuba stability. Electronic supplementary material The online version of this article (10.1186/s13046-018-0806-3) contains supplementary material, which is available to authorized users.