The construction and maintenance of normal epithelia relies on local signals that guide cells into their proper niches and remove unwanted cells. Failure to execute this process properly may result in aberrant development or diseases, including cancer and associated metastasis. Here, we show that local environment influences the behavior of dCsk-deficient cells. Broad loss of dCsk led to enlarged and mispatterned tissues due to overproliferation, a block in apoptosis, and decreased cadherin-mediated adhesion. Loss of dCsk in discrete patches led to a different outcome: epithelial exclusion, invasive migration, and apoptotic death. These latter phenotypes required sharp differences in dCsk activity between neighbors; dE-cadherin, P120-catenin, Rho1, JNK, and MMP2 mediated this signal. Together, our data demonstrate how the cellular microenvironment plays a central role in determining the outcome of altered dCsk activity, and reveal a role for P120-catenin in a mechanism that protects epithelial integrity by removing abnormal cells.