The Drosophila melanogaster warts/lats tumour suppressor has two mammalian counterparts LATS1/Warts‐1 and LATS2/Kpm. Here, we show that mammalian Lats orthologues exhibit distinct expression profiles according to germ cell layer origin. Lats2^−/− embryos show overgrowth in restricted tissues of mesodermal lineage; however, lethality ultimately ensues on or before embryonic day 12.5 preceded by defective proliferation. Lats2^−/− mouse embryonic fibroblasts (MEFs) acquire growth advantages and display a profound defect in contact inhibition of growth, yet exhibit defective cytokinesis. Lats2^−/− embryos and MEFs display centrosome amplification and genomic instability. Lats2 localizes to centrosomes and overexpression of Lats2 suppresses centrosome overduplication induced in wild‐type MEFs and reverses centrosome amplification inherent in Lats2^−/− MEFs. These findings indicate an essential role of Lats2 in the integrity of processes that govern centrosome duplication, maintenance of mitotic fidelity and genomic stability.