Lamellar bodies (LBs) are lysosome-related organelles (LROs) of surfactant-producing alveolar type 2 (AT2) cells of the distal lung epithelium. Trafficking pathways to LBs have been understudied but are likely critical to AT2 cell homeostasis given associations between genetic defects of endosome to LRO trafficking and pulmonary fibrosis in Hermansky Pudlak syndrome (HPS). Our prior studies uncovered a role for AP-3, defective in HPS type 2, in trafficking Peroxiredoxin-6 to LBs. We now show that the P4-type ATPase ATP8A1 is sorted by AP-3 from early endosomes to LBs through recognition of a C-terminal dileucine-based signal. Disruption of the AP-3/ATP8A1 interaction causes ATP8A1 accumulation in early sorting and/or recycling endosomes, enhancing phosphatidylserine exposure on the cytosolic leaflet. This in turn promotes activation of Yes-activating protein, a transcriptional coactivator, augmenting cell migration and AT2 cell numbers. Together, these studies illuminate a mechanism whereby loss of AP-3-mediated trafficking contributes to a toxic gain-of-function that results in enhanced and sustained activation of a repair pathway associated with pulmonary fibrosis.