EHBP1 is an adaptor protein that regulates vesicular trafficking by recruiting Rab8 family members and Eps15-homology domain-containing proteins 1/2 (EHD1/2). It also links endosomes to the actin cytoskeleton. However, the underlying molecular mechanism of activation of EHBP1 actin-binding activity is unclear. Here, we show that both termini of EHBP1 have membrane targeting potential. EHBP1 associates with PI(3)P, PI(5)P, and phosphatidylserine via its N-terminal C2 domain. We show that in the absence of Rab8 family members, the C-terminal bivalent Mical/EHBP Rab binding (bMERB) domain forms an intramolecular complex with its central calponin homology (CH) domain and auto-inhibits actin binding. Rab8 binding to the bMERB domain relieves this inhibition. We have analyzed the CH:bMERB auto-inhibited complex and the active bMERB:Rab8 complex biochemically and structurally. Together with structure-based mutational studies, this explains how binding of Rab8 frees the CH domain and allows it to interact with the actin cytoskeleton, leading to membrane tubulation.