Stem cells control their mitotic activity to decide whether to proliferate or to stay in quiescence. Drosophila neural stem cells (NSCs) are quiescent at early larval stages, when they are reactivated in response to metabolic changes. Here we report that cell-contact inhibition of growth through the canonical Hippo signalling pathway maintains NSC quiescence. Loss of the core kinases hippo or warts leads to premature nuclear localization of the transcriptional co-activator Yorkie and initiation of growth and proliferation in NSCs. Yorkie is necessary and sufficient for NSC reactivation, growth and proliferation. The Hippo pathway activity is modulated via inter-cellular transmembrane proteins Crumbs and Echinoid that are both expressed in a nutrient-dependent way in niche glial cells and NSCs. Loss of crumbs or echinoid in the niche only is sufficient to reactivate NSCs. Finally, we provide evidence that the Hippo pathway activity discriminates quiescent from non-quiescent NSCs in the Drosophila nervous system.