The oncogenic phosphatase PRL-3 is highly expressed in metastatic colorectal cancer but not in nonmetastatic colorectal cancer or noncolorectal cancer metastatic cancers. Although the proinvasive capacity of PRL-3 has been validated in multiple types of cancer, its impact on colorectal cancer progression and the underlying mechanisms remain poorly understood. Here, we report that overexpressed PRL-3 stimulates G2-M arrest, chromosomal instability (CIN), self-renewal, and growth of colorectal cancer cells in xenograft models, while colorectal cancer cell proliferation is decreased. PRL-3-induced-G2-Marrest was associated with decreased expression of Aurora kinase A (AURKA). PRL-3-promoted slow proliferation, CIN, self-renewal, and growth in xenografts were counteracted by ectopic expression of AURKA. Conversely, knockdown of PRL-3 resulted in low proliferation, S-phase arrest, impaired self-renewal, increased apoptosis, and diminished xenograft growth independently of AURKA. Analysis of colorectal cancer specimens showed that expression of PRL-3 was associated with high status of CIN and poor prognosis, which were antagonized by expression of AURKA. PRL-3 enhanced AURKA ubiquitination and degradation in a phosphatase-dependent fashion. PRL-3 interacted with AURKA and FZR1, a regulatory component of the APC/CFZR1 complex. Destabilization ofAURKA by PRL-3 required PRL-3-mediated dephosphorylation of FZR1 and assembly of the APC/CFZR1 complex. Our study suggests that PRL-3-regulated colorectal cancer progression is collectively determined by distinct malignant phenotypes and further reveals PRL-3 as an essential regulator of APC/CFZR1 in controlling the stability of AURKA. Significance: Dephosphorylation of FZR1 by PRL-3 facilitates the activity of APC/CFZR1 by destabilizing AURKA, thus influencing aggressive characteristics and overall progression of colorectal cancer.