Mutations in the intercalated disc proteins, such as plakophilin 2 (PKP2), cause arrhythmogenic cardiomyopathy (AC). AC is characterized by the replacement of cardiac myocytes by fibro-adipocytes, cardiac dysfunction, arrhythmias, and sudden death. To delineate the molecular pathogenesis of AC. Localization and levels of selected intercalated disc proteins, including signaling molecules, were markedly reduced in human hearts with AC. Altered protein constituents of intercalated discs were associated with activation of the upstream Hippo molecules in the human hearts, in Nkx2.5-Cre:Dsp(W/F) and Myh6:Jup mouse models of AC, and in the PKP2 knockdown HL-1 myocytes (HL-1(PKP2:shRNA)). Level of active protein kinase C-α isoform, which requires PKP2 for activity, was reduced. In contrast, neurofibromin 2 (or Merlin), a molecule upstream of the Hippo pathway and that is inactivated by protein kinase C-α isoform, was activated. Consequently, the downstream Hippo molecules mammalian STE20-like protein kinases 1/2 (MST1/2), large tumor suppressor kinases 1/2 (LATS1/2), and Yes-associated protein (YAP) (the latter is the effector of the pathway) were phosphorylated. Coimmunoprecipitation detected binding of phosphorylated YAP, phosphorylated β-catenin, and junction protein plakoglobin (the latter translocated from the junction). RNA sequencing, transcript quantitative polymerase chain reaction, and reporter assays showed suppressed activity of SV40 transcriptional enhancer factor domain (TEAD) and transcription factor 7-like 2 (TCF7L2), which are transcription factors of the Hippo and the canonical Wnt signaling, respectively. In contrast, adipogenesis was enhanced. Simultaneous knockdown of Lats1/2, molecules upstream to YAP, rescued inactivation of YAP and β-catenin and adipogenesis in the HL-1(PKP2:shRNA) myocytes. Molecular remodeling of the intercalated discs leads to pathogenic activation of the Hippo pathway, suppression of the canonical Wnt signaling, and enhanced adipogenesis in AC. The findings offer novel mechanisms for the pathogenesis of AC.