The FERM domain protein Merlin, encoded by the NF2 tumor suppressor gene, regulates cell proliferation in response to adhesive signaling. The growth inhibitory function of Merlin is induced by intercellular adhesion and inactivated by joint integrin/receptor tyrosine kinase signaling. Merlin contributes to the formation of cell junctions in polarized tissues, activates anti-mitogenic signaling at tight-junctions, and inhibits oncogenic gene expression. Thus, inactivation of Merlin causes uncontrolled mitogenic signaling and tumorigenesis. Merlin's predominant tumor suppressive functions are attributable to its control of oncogenic gene expression through regulation of Hippo signaling. Notably, Merlin translocates to the nucleus where it directly inhibits the CRL4DCAF1 E3 ubiquitin ligase, thereby suppressing inhibition of the Lats kinases. A dichotomy in NF2 function has emerged whereby Merlin acts at the cell cortex to organize cell junctions and propagate anti-mitogenic signaling, whereas it inhibits oncogenic gene expression through the inhibition of CRL4DCAF1 and activation of Hippo signaling. The biochemical events underlying Merlin's normal function and tumor suppressive activity will be discussed in this Review, with emphasis on recent discoveries that have greatly influenced our understanding of Merlin biology.