Tissues and organs grow to a characteristic final size during animal development. A hallmark of tissues reaching their final size is the cessation of cell-cycle progression. However, the mechanisms by which cell-cycle progression is halted in tissues reaching their final size remain largely unknown. Here, we show that the extracellular matrix (ECM) is necessary and sufficient to halt cell-cycle progression at G2 phase in Drosophila late-larval-stage wing discs reaching their final size. Depleting ECM in late-larval-stage wing discs leads to nuclear accumulation of the co-transcriptional activator Yorkie (YAP and TAZ in mammals) and to a Yorkie-dependent release of cells from G2-phase arrest. Conversely, increasing ECM thickness induces precocious G2-phase accumulation, which is overcome by expression of an activated form of Yorkie. Furthermore, we show that programmed ECM degradation is necessary for the normal resumption of cell-cycle progression during later pupal stages and for proper adult wing size. Our work identifies a critical role for ECM in restraining cell-cycle progression in tissues reaching their final size and reveals ECM-mediated nuclear exclusion of Yorkie as a key mechanism.