Polarization of epithelial cells depends on a hierarchical process whereby specific membrane-associated proteins become targeted to specialized membrane domains. Here, we describe a novel Drosophila protein, Discs Lost (DLT), that plays a crucial role in the polarization of embryonic epithelia during cellular blastoderm formation. At subsequent stages of development, DLT interacts with the apical determinant Crumbs (CRB) and the laterally localized protein Neurexin IV (NRX IV). Mutations in dlt or double-stranded RNA interference lead to aberrant localization of CRB and NRX IV and cause a concomitant loss of epithelial cell polarity. Hence, DLT is required to establish and maintain cell polarity and participates in different molecular complexes that define apical and lateral membrane domains.