The metastasis-associated phosphatase of regenerating liver-3 (PRL-3) plays multiple roles in progression of various human cancers; however, significance of its role during development has not been addressed. Here we cloned and characterized the expression pattern of zebrafish prl-3 transcript and showed that it is ubiquitiously expressed in the first 24 h of development with both maternal and zygotic expressions. The transcripts become progressively restricted to the notochord, vessels and the intestine by 96 h post-fertilization. Notably, overexpression of zebrafish Prl-3 (zPrl-3) and human PRL-3 induces notochord malformation in zebrafish. This phenotype resembles chordoma and is confirmed by associated misexpression of notochord-specific markers. Clinical significance of the PRL-3 in chordoma is strongly suggested by detection of PRL-3 antigen in clinical chordoma specimens. Collectively, our results uncovered that aberrant overexpression of PRL-3 could initiate chordoma in early development and suggest the use of PRL-3 could be used as a predictor and a therapeutic target for chordoma.