Establishment and maintenance of apico-basal polarity in epithelial organs must be tightly coupled with cell division, but the underlying molecular mechanisms are largely unknown. Using 3D cultures of renal MDCK cells (cysts), we found that the Rab35 GTPase plays a crucial role in polarity initiation and apical lumen positioning during the first cell division of cyst development. At the molecular level, Rab35 physically couples cytokinesis with the initiation of apico-basal polarity by tethering intracellular vesicles containing key apical determinants at the cleavage site. These vesicles transport aPKC, Cdc42, Crumbs3 and the lumen-promoting factor Podocalyxin, and are tethered through a direct interaction between Rab35 and the cytoplasmic tail of Podocalyxin. Consequently, Rab35 inactivation leads to complete inversion of apico-basal polarity in 3D cysts. This novel and unconventional mode of Rab-dependent vesicle targeting provides a simple mechanism for triggering both initiation of apico-basal polarity and lumen opening at the centre of cysts.