In epithelia, cells adhere to each other in a dynamic fashion, allowing the cells to change their shape and move along each other during morphogenesis. The regulation of adhesion occurs at the belt-shaped adherens junction, the zonula adherens (ZA). Formation of the ZA depends on components of the Par-atypical PKC (Par-aPKC) complex of polarity regulators. We have identified the Lin11, Isl-1, Mec-3 (LIM) protein Smallish (Smash), the orthologue of vertebrate LMO7, as a binding partner of Bazooka/Par-3 (Baz), a core component of the Par-aPKC complex. Smash also binds to Canoe/Afadin and the tyrosine kinase Src42A and localizes to the ZA in a planar polarized fashion. Animals lacking Smash show loss of planar cell polarity (PCP) in the embryonic epidermis and reduced cell bond tension, leading to severe defects during embryonic morphogenesis of epithelial tissues and organs. Overexpression of Smash causes apical constriction of epithelial cells. We propose that Smash is a key regulator of morphogenesis coordinating PCP and actomyosin contractility at the ZA.