Adenomatous polyposis coli (APC) is a key molecule to maintain cellular homeostasis in colonic epithelium by regulating cell-cell adhesion, cell polarity, and cell migration through activating the APC-stimulated guanine nucleotide-exchange factor (Asef). The APC-activated Asef stimulates the small GTPase, which leads to decreased cell-cell adherence and cell polarity, and enhanced cell migration. In colorectal cancers, while truncated APC constitutively activates Asef and promotes cancer initiation and progression, regulation of Asef by full-length APC is still unclear. Here, we report the autoinhibition mechanism of full-length APC. We found that the armadillo repeats in full-length APC interact with the APC residues 1362 to 1540 (APC-2,3 repeats), and this interaction competes off and inhibits Asef. Deletion of APC-2,3 repeats permits Asef interactions leading to downstream signaling events, including the induction of Golgi fragmentation through the activation of the Asef-ROCK-MLC2. Truncated APC also disrupts protein trafficking and cholesterol homeostasis by inhibition of SREBP2 activity in a Golgi fragmentation-dependent manner. Our study thus uncovers the autoinhibition mechanism of full-length APC and a novel gain of function of truncated APC in regulating Golgi structure, as well as cholesterol homeostasis, which provides a potential target for pharmaceutical intervention against colon cancers.