Epithelial tubes are the functional units of many organs, but little is known about how tube sizes are established. Using the Drosophila tracheal system as a model, we previously showed that mutations in varicose (vari) cause tubes to become elongated without increasing cell number. Here we show vari is required for accumulation of the tracheal size-control proteins Vermiform and Serpentine in the tracheal lumen. We also show that vari is an essential septate junction (SJ) gene encoding a membrane associated guanylate kinase (MAGUK). In vivo analyses of domains important for MAGUK scaffolding functions demonstrate that while the Vari HOOK domain is essential, the L27 domain is dispensable. Phylogenetic analyses reveal that Vari helps define a new MAGUK subgroup that includes mammalian PALS2. Importantly, both Vari and PALS2 are basolateral, and the interaction of Vari with the cell-adhesion protein Neurexin IV parallels the interaction of PALS2 and another cell-adhesion protein, Necl-2. Vari therefore bolsters the similarity between Drosophila and vertebrate epithelial basolateral regions, which had previously been limited to the common basolateral localization of Scrib, Dlg and Lgl, proteins required for epithelial polarization at the beginning of embryogenesis. However, by contrast to Scrib, Dlg and Lgl, Vari is not required for cell polarity but rather is part of a cell-adhesion complex. Thus, Vari fundamentally extends the similarity of Drosophila and vertebrate basolateral regions from sharing only polarity complexes to sharing both polarity and cell-adhesion complexes.