Exploration of novel electromagnetic phenomena is a subject of great interest in topological quantum materials. One of the unprecedented effects to be experimentally verified is the topological magnetoelectric (TME) effect originating from an unusual coupling of electric and magnetic fields in materials. A magnetic heterostructure of topological insulator (TI) hosts such exotic magnetoelectric coupling and can be expected to realize the TME effect as an axion insulator. We designed a magnetic TI with a tricolor structure where a nonmagnetic layer of (Bi, Sb)2Te3 is sandwiched by a soft ferromagnetic Cr-doped (Bi, Sb)2Te3 and a hard ferromagnetic V-doped (Bi, Sb)2Te3. Accompanied by the quantum anomalous Hall (QAH) effect, we observe zero Hall conductivity plateaus, which are a hallmark of the axion insulator state, in a wide range of magnetic fields between the coercive fields of Cr- and V-doped layers. The resistance of the axion insulator state reaches as high as 109 ohms, leading to a gigantic magnetoresistance ratio exceeding 10,000,000% upon the transition from the QAH state. The tricolor structure of the TI may not only be an ideal arena for the topologically distinct phenomena but can also provide magnetoresistive applications for advancing dissipation-less topological electronics.