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The Hippo-YAP/TAZ signaling pathway plays a critical role in tissue homeostasis, tumorigenesis, and degeneration disorders. The regulation of YAP/TAZ levels is controlled by a complex regulatory network, where several feedback loops have been identified. However, it remains elusive how these feedback loops contain the YAP/TAZ levels and maintain the system in a healthy physiological state or trap the system in pathological conditions. Here, a mathematical model was developed to represent the YAP/TAZ regulatory network. Through theoretical analyses, three distinct states that designate the one physiological and two pathological outcomes were found. The transition from the physiological state to the two pathological states is mechanistically controlled by coupled bidirectional bistable switches, which are robust to parametric variation and stochastic fluctuations at the molecular level. This work provides a mechanistic understanding of the regulation and dysregulation of YAP/TAZ levels in tissue state transitions.