The establishment of tight junctions and cell polarity is an essential process in all epithelia. Endotubin is an integral membrane protein found in apical endosomes of developing epithelia when tight junctions and epithelial polarity first arise. We found that the disruption of endotubin function in cells in culture by siRNA or overexpression of the C-terminal cytoplasmic domain of endotubin causes defects in organization and function of tight junctions. We observe defects in localization of tight junction proteins, reduced transepithelial resistance, increased lanthanum penetration between cells and reduced ability of cells to form cysts in three-dimensional culture. In addition, in cells overexpressing the C-terminal domain of endotubin, we observe a delay in re-establishing the normal distribution of endosomes after calcium switch. These results suggest that endotubin regulates trafficking of polarity proteins and tight junction components out of the endosomal compartment, thereby providing a critical link between a resident protein of apical endosomes and tight junctions.