Autotaxin (ATX) is a secreted glycoprotein and the only member of the ectonucleotide pyrophosphatase/phosphodiesterase family that converts lysophosphatidylcholine (LPC) into lysophosphatidic acid (LPA). LPA controls key responses, such as cell migration, proliferation, and survival, implicating ATX-LPA signaling in various (patho)physiological processes and establishing it as a drug target. ATX structural and functional studies have revealed an orthosteric and an allosteric site, called the "pocket" and the "tunnel," respectively. However, the mechanisms in allosteric modulation of ATX's activity as a lysophospholipase D are unclear. Here, using the physiological LPC substrate, a new fluorescent substrate, and diverse ATX inhibitors, we revisited the kinetics and allosteric regulation of the ATX catalytic cycle, dissecting the different steps and pathways leading to LPC hydrolysis. We found that ATX activity is stimulated by LPA and that LPA activates ATX lysophospholipase D activity by binding to the ATX tunnel. A consolidation of all experimental kinetics data yielded a comprehensive catalytic model supported by molecular modeling simulations and suggested a positive feedback mechanism that is regulated by the abundance of the LPA products activating hydrolysis of different LPC species. Our results complement and extend the current understanding of ATX hydrolysis in light of the allosteric regulation by ATX-produced LPA species and have implications for the design and application of both orthosteric and allosteric ATX inhibitors.