Abstract Background An increased expression of Yes-associated protein (YAP1) has been shown to promote tumorigenesis in many cancer types including colon. However, the role of YAP1 in promoting colon tumorigenesis remains unclear. Here, we demonstrate that YAP1 expression is associated with M2 tumor-associated macrophage polarization and the generation of colon cancer stem-like cells. YAP1 downregulation by gene silencing or a phytochemical, ovatodiolide, not only suppresses colon cancer tumorigenesis but also prevents M2 TAM polarization. Methods Human monocytic cells, THP-1, and colon cancer cell lines, HCT116 and DLD-1, were co-cultured to mimic the interactions between tumor and its microenvironment. M2 polarization of the THP-1 cells were examined using both flow cytometry and q-PCR technique. The inhibition of YAP1 signaling was achieved by gene-silencing technique or ovatodiolide. The molecular consequences of YAP1 inhibition was demonstrated via colony formation, migration, and colon-sphere formation assays. 5-FU and ovatodiolide were used in drug combination studies. Xenograft and syngeneic mouse models were used to investigate the role of YAP1 in colon tumorigenesis and TAM generation. Results An increased YAP1 expression was found to be associated with a poor prognosis in patients with colon cancer using bioinformatics approach. We showed an increased YAP1 expression in the colon spheres, and colon cancer cells co-cultured with M2 TAMs. YAP1-silencing led to the concomitant decreased expression of major oncogenic pathways including Kras, mTOR, Î˛-catenin, and M2-promoting IL-4 and tumor-promoting IL-6 cytokines. TAM co-cultured colon spheres showed a significantly higher tumor-initiating ability in vivo. Ovatodiolide treatment alone and in combination with 5-FU significantly suppressed in vivo tumorigenesis and less TAM infiltration in CT26 syngeneic mouse model. Conclusions We have identified the dual function of YAP1 where its suppression not only inhibited tumorigenesis but also prevented the generation of cancer stem-like cells and M2 TAM polarization. Ovatodiolide treatment suppressed YAP1 oncogenic pathways to inhibit colon tumorigenesis and M2 TAM generation both in vitro and in vivo. Ovatodiolide should be considered for its potential for adjuvant therapeutic development.