Precise regulation of cell shape is vital for building functional tissues. Here, we study the mechanisms that lead to the formation of highly elongated anisotropic epithelial cells in the Drosophila epidermis. We demonstrate that this cell shape is the result of two counteracting mechanisms at the cell surface that regulate the degree of elongation: actomyosin, which inhibits cell elongation downstream of RhoA (Rho1 in Drosophila) and intercellular adhesion, modulated via clathrin-mediated endocytosis of E-cadherin (encoded by shotgun in flies), which promotes cell elongation downstream of the GTPase Arf1 (Arf79F in Drosophila). We show that these two mechanisms do not act independently but are interconnected, with RhoA signalling reducing Arf1 recruitment to the plasma membrane. Additionally, cell adhesion itself regulates both mechanisms - p120-catenin, a regulator of intercellular adhesion, promotes the activity of both Arf1 and RhoA. Altogether, we uncover a complex network of interactions between cell-cell adhesion, the endocytic machinery and the actomyosin cortex, and demonstrate how this network regulates cell shape in an epithelial tissue in vivo.