Epithelial cells have a distinctive polarity based on the restricted distribution of proteins and junctional complexes along an apical-basal axis. Studying the formation of the polarized ectoderm of the Drosophila embryo has identified a number of the molecules that establish this polarity. The Crumbs (Crb) complex is one of three separate complexes that cooperate to control epithelial polarity and the formation of zonula adherens. Here we show that glaikit (gkt), a member of the phospholipase D superfamily, is essential for the formation of epithelial polarity and for neuronal development during Drosophila embryogenesis. In epithelial cells, gkt acts to localize the Crb complex of proteins to the apical lateral membrane. Loss of gkt during neuronal development leads to a severe CNS architecture disruption that is not dependent on the Crb pathway but probably results from the disrupted localization of other membrane proteins. A mutation in the human homolog of gkt causes the neurodegenerative disease spinocerebellar ataxia with neuropathy (SCAN1), making it possible that a failure of membrane protein localization is a cause of this disease.