Epithelial morphogenesis is characterized by an exquisite control of cell shape and position. Progression through dorsal closure in Drosophila gastrulation depends on the ability of Rap1 GTPase to signal through the adherens junctional multidomain protein Canoe. Here, we provide genetic evidence that epithelial Rap activation and Canoe effector usage are conferred by the Drosophila PDZ-GEF (dPDZ-GEF) exchange factor. We demonstrate that dPDZ-GEF/Rap/Canoe signaling modulates cell shape and apicolateral cell constriction in embryonic and wing disc epithelia. In dPDZ-GEF mutant embryos with strong dorsal closure defects, cells in the lateral ectoderm fail to properly elongate. Postembryonic dPDZ-GEF mutant cells generated in mosaic tissue display a striking extension of lateral cell perimeters in the proximity of junctional complexes, suggesting a loss of normal cell contractility. Furthermore, our data indicate that dPDZ-GEF signaling is linked to myosin II function. Both dPDZ-GEF and cno show strong genetic interactions with the myosin II-encoding gene, and myosin II distribution is severely perturbed in epithelia of both mutants. These findings provide the first insight into the molecular machinery targeted by Rap signaling to modulate epithelial plasticity. We propose that dPDZ-GEF-dependent signaling functions as a rheostat linking Rap activity to the regulation of cell shape in epithelial morphogenesis at different developmental stages.