The formation of metastasis is one of the most critical problems in oncology. The phosphatase of regenerating liver 3 (PRL-3) is a new target in colorectal cancer, mediating metastatic behavior through a promigratory function. However, detailed explanations for this effect have remained elusive. Here we show that PRL-3 interacts with the ADP-ribosylation factor 1 (Arf1). PRL-3 colocalizes with Arf1 in an endosomal compartment and associates with transmembrane proteins such as the transferrin receptor and α5 integrins. PRL-3 interacts with Arf1 through a distinct motif and regulates activation of Arf1. PRL-3-mediated migration depends on expression and activation of Arf1 and is sensitive to treatment with Brefeldin A. We also demonstrate that PRL-3 modulates recycling of α5 integrins and that its phosphatase activity as well as Arf activation and compartmentalization with Arf1 are required for this effect. In summary our data identify a new function for PRL-3 and show that Arf1 is a new PRL-3-dependent mediator of enhanced migration of cancer cells through enhanced recycling of matrix receptors.