Autotaxin, a lysophospholipase D encoded by the Enpp2 gene, is an exoenzyme that produces lysophosphatidic acid in the extracellular space. Lysophosphatidic acid acts on specific G protein-coupled receptors, thereby regulating cell growth, migration, and survival. Previous studies have revealed that Enpp2(-/-) mouse embryos die at about embryonic day (E) 9.5 because of angiogenic defects in the yolk sac. However, what cellular defects occur in Enpp2(-/-) embryos and what intracellular signaling pathways are involved in the phenotype manifestation remain unknown. Here, we show that Enpp2 is required to form distinctive large lysosomes in the yolk sac visceral endoderm cells. From E7.5 to E9.5, Enpp2 mRNA is abundantly expressed in the visceral endoderm cells. In Enpp2(-/-) mouse embryos, lysosomes in the visceral endoderm cells are fragmented. By using a whole embryo culture system combined with specific pharmacological inhibitors for intracellular signaling molecules, we show that lysophosphatidic acid receptors and the Rho-Rho-associated coiled-coil containing protein kinase (ROCK)-LIM kinase pathway are required to form large lysosomes. In addition, electroporation of dominant negative forms of Rho, ROCK, or LIM kinase also leads to the size reduction of lysosomes in wild-type visceral endoderm cells. In Enpp2(-/-) visceral endoderm cells, the steady-state levels of cofilin phosphorylation and actin polymerization are reduced. In addition, perturbations of actin turnover dynamics by actin inhibitors cytochalasin B and jasplakinolide result in the defect in lysosome formation. These results suggest that constitutive activation of the Rho-ROCK-LIM kinase pathway by extracellular production of lysophosphatidic acid by the action of autotaxin is required to maintain the large size of lysosomes in visceral endoderm cells.