Human pancreatic ductal adenocarcinoma (PDAC) harboring one KRAS mutant allele often displays increasing genomic loss of the remaining wild-type (WT) allele (known as LOH at KRAS) as tumors progress to metastasis, yet the molecular ramification of this WT allelic loss is unknown. In this study, we showed that the restoration of WT KRAS expression in human PDAC cell lines with LOH at KRAS significantly attenuated the malignancy of PDAC cells both in vitro and in vivo, demonstrating a tumor-suppressive role of the WT KRAS allele. Through RNA-Seq, we identified the HIPPO signaling pathway to be positively regulated by WT KRAS in PDAC cells. In accordance with this observation, PDAC cells with LOH at KRAS exhibited increased nuclear localization and activation of transcriptional co-activator YAP1. Mechanistically, we discovered that WT KRAS expression sequestered YAP1 from the nucleus, through enhanced 14-3-3zeta interaction with phosphorylated YAP1 at S127. Consistently, expression of a constitutively-active YAP1 mutant in PDAC cells bypassed the growth inhibitory effects of WT KRAS. In patient samples, we found that the YAP1-activation genes were significantly upregulated in tumors with LOH at KRAS, and YAP1 nuclear localization predicted poor survival for PDAC patients. Collectively, our results reveal that the WT allelic loss leads to functional activation of YAP1 and enhanced tumor malignancy, which explains the selection advantage of the tumor cells with LOH at KRAS during pancreatic cancer clonal evolution and progression to metastasis, and should be taken into consideration in future therapeutic strategies targeting KRAS.