Coordinated regulation of the actin cytoskeleton by the Rho GTPase family is required for the maintenance of polarity in epithelial cells as well as for their proliferation and migration. A RhoGTPase-activating protein 17 (Arhgap17) is known to be involved in multiple cellular processes in vitro, including the maintenance of tight junctions and vesicle trafficking. However, the function of Arhgap17 has not been studied in the physiological context. Here, we generated Arhgap17-deficient mice and examined the effect in the epithelial and mucosal barriers of the intestine. Reporter staining revealed that Arhgap17 expression is limited to the luminal epithelium of intestine. Arhgap17-deficient mice show an increased paracellular permeability and aberrant localization of the apical junction complex in the luminal epithelium, but do not develop spontaneous colitis. The inner mucus layer is impervious to the enteric bacteria irrespective of Tff3 downregulation in the Arhgap17-deficient mice. Interestingly however, treatment with dextran sulfate sodium (DSS) causes an increased accumulation of DSS and TNF production in intraluminal cells and rapid destruction of the inner mucus layer, resulting in increased severity of colitis in mutant mice. Overall, these data reveal that Arhgap17 has a novel function in regulating transcellular transport and maintaining integrity of intestinal barriers.