Although CD133 has been considered to be a molecular marker for cancer stem cells, its functional roles in tumorigenesis remain unclear. We here examined the molecular basis behind CD133-mediated signaling. Knockdown of CD133 resulted in the retardation of xenograft tumor growth of colon cancer-derived HT-29 and LoVo cells accompanied by hypophosphorylation of AKT, which diminished β-catenin/T-cell factor-mediated CD44 expression. As tyrosine residues of CD133 at positions 828 and 852 were phosphorylated in HT-29 and SW480 cells, we further addressed the significance of this phosphorylation in the tumorigenesis of SW480 cells expressing mutant CD133, with substitution of these tyrosine residues by glutamate (CD133-EE) or phenylalanine (CD133-FF). Forced expression of CD133-EE promoted much more aggressive xenograft tumor growth relative to wild-type CD133-expressing cells accompanied by hyperphosphorylation of AKT; however, CD133-FF expression had negligible effects on AKT phosphorylation and xenograft tumor formation. Intriguingly, the tyrosine phosphorylation status of CD133 was closely linked to the growth of SW480-derived spheroids. Using yeast two-hybrid screening, we finally identified receptor-type protein tyrosine phosphatase κ (PTPRK) as a binding partner of CD133. In vitro studies demonstrated that PTPRK associates with the carboxyl-terminal region of CD133 through its intracellular phosphatase domains and also catalyzes dephosphorylation of CD133 at tyrosine-828/tyrosine-852. Silencing of PTPRK elevated the tyrosine phosphorylation of CD133, whereas forced expression of PTPRK reduced its phosphorylation level markedly and abrogated CD133-mediated AKT phosphorylation. Endogenous CD133 expression was also closely associated with higher AKT phosphorylation in primary colon cancer cells, and ectopic expression of CD133 enhanced AKT phosphorylation. Furthermore, lower PTPRK expression significantly correlated with the poor prognosis of colon cancer patients with high expression of CD133. Thus, our present findings strongly indicate that the tyrosine phosphorylation of CD133, which is dephosphorylated by PTPRK, regulates AKT signaling and has a critical role in colon cancer progression.