Abstract Background Growing evidence has revealed the involvement of circular RNAs (circRNAs) in numerous carcinogenesis. However, the role of circRNAs in the cancer biology of colorectal cancer (CRC) remains vague. Methods Quantitative RT-PCR was used to detect the expression level of circRAE1 in CRC tissues and CRC cell lines. Cell proliferation, migration, and invasion were detected using CCK8 assay, Colony formation assay, wound-healing and Transwell assays. The interaction between circRAE1 and miR-338-3p and TRYO3 was confirmed using dual-luciferase reporter assays. Results We uncovered a novel circRNA Hsa_circ_0060967 (also known as circRAE1) that was remarkably increased in CRC tissues. The high circRAE1 level was positively associated with advanced tumor stage, lymph node metastasis, and tumor size. The loss-of-function assay showed that circRAE1 accelerated cell proliferation, migration, and invasion. Besides, miR-338-3p was lowly expressed in the CRC tissues and CRC cell lines. The dual-luciferase reporter assays showed that circRAE1 could sponge miR-338-3p, which targeted TRYO3 in CRC cells. Furthermore, the overexpression of circRAE1 could rescue the impaired migration and invasion triggered by miR-338-3p mimics or si-TYRO3 in CRC cells and vice versa. Conclusion We identified the network of circRAE1, miR-338-3p, and TYRO3 in CRC cells and determined that the increase in circRAE1 could serve as an oncogene by sponging miR-338-3p, which resulted in an upregulated TYRO3 expression. The finding suggests that circRAE1 is a potential therapeutic target and diagnostic marker for CRC treatment.