Drosophila development is a tightly regulated process involving metamorphosis of a relatively less mobile larva to a highly motile adult, triggered by secretion of 20-hydroxyecdysone. Under the influence of ecdysone, most of the larval tissues degenerate, while the imaginal cells differentiate and form adult specific structures. Although the larval Malpighian tubules do not seem to be affected by ecdysone during metamorphosis, we show that ecdysone signaling plays an important role in the early development and functioning of Malpighian tubules. Disruption of ecdysone receptor function, using targeted expression of dominant negative ecdysone receptor in stellate cells, results in disruption of organization of Malpighian tubules. The number of stellate cells is reduced in such Malpighian tubules. Further, they get clustered rather than distributed in their characteristic wild type pattern. We also demonstrate that expression of Drosophila integrin protein (DRIP), an aquaporin responsible for trans-cellular water transport, is also reduced in stellate cells when ecdysone signaling is disrupted. Our results show that of the three ecdysone receptor isoforms, only EcR-B2 rescues these phenotypes. A similar pattern of stellate cell clustering and reduced expression of DRIP is observed in ecd(1), a temperature sensitive mutant, under non-permissive conditions. These results suggest that ecdysone signaling is required for proper patterning and functioning of stellate cells and that EcR-B2 may be the primary isoform required for ecdysone signaling in stellate cells.