YAP1 and TAZ are transcriptional co-activator proteins that play fundamental roles in many biological processes, from cell proliferation and cell lineage fate determination to tumorigenesis. We previously demonstrated that Limb Expression 1 (LIX1) regulates YAP1 and TAZ activity and controls digestive mesenchymal progenitor proliferation. However, LIX1 mode of action remains elusive. Here, we found that endogenous LIX1 is localized in mitochondria and is anchored to the outer mitochondrial membrane through S-palmitoylation of cysteine 84, a residue conserved in all LIX1 orthologs. LIX1 downregulation altered the mitochondrial ultrastructure, resulting in a significantly decreased respiration and attenuated production of mitochondrial reactive oxygen species (mtROS). Mechanistically, LIX1 knock-down impaired the stability of the mitochondrial proteins PHB2 and OPA1 that are found in complexes with mitochondrial-specific phospholipids and are required for cristae organization. Supplementation with unsaturated fatty acids counteracted the effects of LIX1 knock-down on mitochondrial morphology and ultrastructure and restored YAP1/TAZ signaling. Collectively, our data demonstrate that LIX1 is a key regulator of cristae organization, modulating mtROS level and subsequently regulating the signaling cascades that control fate commitment of digestive mesenchyme-derived cells.