Epithelial morphogenesis and stability are essential for normal development and organ homeostasis. The mouse neural plate is a cuboidal epithelium that remodels into a columnar pseudostratified epithelium over the course of 24 hr. Here we show that the transition to a columnar epithelium fails in mutant embryos that lack the tumor suppressor PTEN, although proliferation, patterning and apical-basal polarity markers are normal in the mutants. The Pten phenotype is mimicked by constitutive activation of PI3 kinase and is rescued by the removal of PDK1 (PDPK1), but does not depend on the downstream kinases AKT and mTORC1. High resolution imaging shows that PTEN is required for stabilization of planar cell packing in the neural plate and for the formation of stable apical-basal microtubule arrays. The data suggest that appropriate levels of membrane-associated PDPK1 are required for stabilization of apical junctions, which promotes cell elongation, during epithelial morphogenesis.