Most tubes have seams (intercellular or autocellular junctions that seal membranes together into a tube), but “seamless” tubes also exist [1, 2, 3]. In Drosophila, stellate-shaped tracheal terminal cells make seamless tubes, with single branches running through each of dozens of cellular extensions. We find that mutations in braided impair terminal cell branching and cause formation of seamless tube cysts. We show that braided encodes Syntaxin7 and that cysts also form in cells deficient for other genes required either for membrane scission (shibire) or for early endosome formation (Rab5, Vps45, and Rabenosyn-5). These data define a requirement for early endocytosis in shaping seamless tube lumens. Importantly, apical proteins Crumbs and phospho-Moesin accumulate to aberrantly high levels in braided terminal cells. Overexpression of either Crumbs or phosphomimetic Moesin induced lumenal cysts and decreased terminal branching. Conversely, the braided seamless tube cyst phenotype was suppressed by mutations in crumbs or Moesin. Indeed, mutations in Moesin dominantly suppressed seamless tube cyst formation and restored terminal branching. We propose that early endocytosis maintains normal steady-state levels of Crumbs, which recruits apical phosphorylated (active) Moe, which in turn regulates seamless tube shape through modulation of cortical actin filaments.