Zona occludens (ZO) proteins are molecular scaffolds localized to cell junctions, which regulate epithelial integrity in mammals. Using newly generated null alleles, we demonstrate that polychaetoid (pyd), the unique Drosophila melanogaster ZO homologue, regulates accumulation of adherens junction-localized receptors, such as Notch, although it is dispensable for epithelial polarization. Pyd positively regulates Notch signaling during sensory organ development but acts negatively on Notch to restrict the ovary germline stem cell niche. In both contexts, we identify a core antagonistic interaction between Pyd and the WW domain E3 ubiquitin ligase Su(dx). Pyd binds Su(dx) directly, in part through a noncanonical WW-binding motif. Pyd also restricts epithelial wing cell numbers to control adult wing shape, a function associated with the FERM protein Expanded and independent of Su(dx). As both Su(dx) and Expanded regulate trafficking, we propose that a conserved role of ZO proteins is to coordinate receptor trafficking and signaling with junctional organization. © 2011 Djiane et al.