Membrane trafficking is defined as the vesicular transport of proteins into, out of, and throughout the cell. In intestinal enterocytes, defects in endocytic/recycling pathways result in impaired function and are linked to diseases. However, how these trafficking pathways regulate intestinal tissue homeostasis is poorly understood. Using the Drosophila intestine as an in vivo system, we investigated enterocyte-specific functions for the early endosomal machinery. We focused on Rab21, which regulates specific steps in early endosomal trafficking. Depletion of Rab21 in enterocytes led to abnormalities in intestinal morphology, with deregulated cellular equilibrium associated with a gain in mitotic cells and increased cell death. Increases in apoptosis and Yorkie signaling were responsible for compensatory proliferation and tissue inflammation. Using an RNA interference screen, we identified regulators of autophagy and membrane trafficking that phenocopied Rab21 knockdown. We further showed that Rab21 knockdown-induced hyperplasia was rescued by inhibition of epidermal growth factor receptor signaling. Moreover, quantitative proteomics identified proteins affected by Rab21 depletion. Of these, we validated changes in apolipoprotein ApoLpp and the trehalose transporter Tret1-1, indicating roles for enterocyte Rab21 in lipid and carbohydrate homeostasis, respectively. Our data shed light on an important role for early endosomal trafficking, and Rab21, in enterocyte-mediated intestinal epithelium maintenance.