The proline-glutamic acid (PE) and proline-proline-glutamic acid (PPE) family proteins are prevalent in pathogenic mycobacteria and play a diverse role in mycobacterial pathogenesis. While some members have been studied, the function of most PE/PPE proteins remains unknown. In this study, we isolated a transposon-inactivated PPE38 mutant of Mycobacterium marinum and characterized its phenotype. We found that the PPE38 protein is associated with the cell wall and exposed on the cell surface. The inactivation of PPE38 altered the bacterial cell surface properties and led to deficiencies in cord formation, sliding motility, and biofilm formation. The PPE38 mutant was defective in phagocytosis by macrophages and exhibited reduced virulence in adult zebrafish. We also found that PPE38 is involved in the induction of proinflammatory cytokines in infected macrophages. Together, our results indicate that PPE38, a previously uncharacterized protein, plays a role in mycobacterial virulence, presumably by modulating the host innate immune response.