The evolutionarily conserved Crumbs protein is required for epithelial polarity and morphogenesis. Here we identify a novel role of Crumbs as a negative regulator of actomyosin dynamics during dorsal closure in the Drosophila embryo. Embryos carrying a mutation in the FERM (protein 4.1/ezrin/radixin/moesin) domain-binding motif of Crumbs die due to an overactive actomyosin network associated with disrupted adherens junctions. This phenotype is restricted to the amnioserosa and does not affect other embryonic epithelia. This function of Crumbs requires DMoesin, the Rho1-GTPase, class-I p21-activated kinases and the Arp2/3 complex. Data presented here point to a critical role of Crumbs in regulating actomyosin dynamics, cell junctions and morphogenesis.