The E3 ubiquitin ligase Mule is often overexpressed in human colorectal cancers, but its role in gut tumorigenesis is unknown. Here, we show in vivo that Mule controls murine intestinal stem and progenitor cell proliferation by modulating Wnt signaling via c-Myc. Mule also regulates protein levels of the receptor tyrosine kinase EphB3 by targeting it for proteasomal and lysosomal degradation. In the intestine, EphB/ephrinB interactions position cells along the crypt-villus axis and compartmentalize incipient colorectal tumors. Our study thus unveils an important new avenue by which Mule acts as an intestinal tumor suppressor by regulation of the intestinal stem cell niche.