Dynamic epithelial reorganization is essential for morphogenesis of various organs. In Drosophila embryos, for example the Malpighian tubule is generated by cellular rearrangement of a preexisting epithelium and the tracheal network is formed by outgrowth, branching, and fusion of epithelial vesicles. Here we report that the previously identified locus shotgun (shg) encodes DE-cadherin, an epithelial cell-cell adhesion molecule of the classic cadherin type and that zygotic shg mutations rather specifically impair processes of the dynamic epithelial morphogenesis. In the mutants, the Malpighian tubule disintegrated into small spherical structures, and the tracheal network formation was blocked in selected steps. The malformation of these organs could be rescued by overexpression of DE-cadherin cDNA under a heat shock promoter. Unexpectedly, the zygotic null condition did not severely affect general epithelial organization; most epithelial tissues maintained not only their cell-cell associations but also their apicobasal polarity in the mutants. The zygotic null mutant retained a certain level of maternally derived DE-cadherin molecules until the end of embryogenesis. These results suggest that zygotic DE-cadherin expression is critical for the rearrangement processes of epithelial cells, whereas the maternally derived DE-cadherin may serve only for the maintenance of the static architecture of the epithelia.