The majority of membrane and secreted proteins, including many developmentally important signalling proteins, receptors and adhesion molecules, are cotranslationally N-glycosylated in the endoplasmic reticulum. The structure of the N-glycan is invariant for all substrates and conserved in eukaryotes. Correspondingly, the enzymes are conserved, which successively assemble the glycan precursor from activated monosaccharides prior to transfer to nascent proteins. Despite the well-defined biochemistry, the physiological and developmental role of N-glycosylation and of the responsible enzymes has not been much investigated in metazoa. We identified a mutation in the Drosophila gene, xiantuan (xit, CG4542), which encodes one of the conserved enzymes involved in addition of the terminal glucose residues to the glycan precursor. xit is required for timely apical constriction of mesoderm precursor cells and ventral furrow formation in early embryogenesis. Furthermore, cell intercalation in the lateral epidermis during germband extension is impaired in xit mutants. xit affects glycosylation and intracellular distribution of E-Cadherin, albeit not the total amount of E-Cadherin protein. As depletion of E-Cadherin by RNAi induces a similar cell intercalation defect, E-Cadherin may be the major xit target that is functionally relevant for germband extension.