Mutations in APC promote colorectal cancer (CRC) progression through uncontrolled WNT signaling. Patients with desmoplastic CRC have a significantly worse prognosis and do not benefit from chemotherapy, but the mechanisms underlying the differential responses of APC-mutant CRCs to chemotherapy are not well understood. We report that expression of the transcription factor prospero homeobox 1 (PROX1) was reduced in desmoplastic APC-mutant human CRCs. In genetic Apc-mutant mouse models, loss of Prox1 promoted the growth of desmoplastic, angiogenic, and immunologically silent tumors through derepression of Mmp14. Although chemotherapy inhibited Prox1-proficient tumors, it promoted further stromal activation, angiogenesis, and invasion in Prox1-deficient tumors. Blockade of vascular endothelial growth factor A (VEGFA) and angiopoietin-2 (ANGPT2) combined with CD40 agonistic antibodies promoted antiangiogenic and immunostimulatory reprogramming of Prox1-deficient tumors, destroyed tumor fibrosis, and unleashed T cell–mediated killing of cancer cells. These results pinpoint the mechanistic basis of chemotherapy-induced hyperprogression and illustrate a therapeutic strategy for chemoresistant and desmoplastic CRCs.