Junctional adhesion molecule (JAM)-A is an integral membrane protein at tight junctions of epithelial cells which associates with the cell polarity protein PAR-3. Here, we demonstrate that downregulation of JAM-A impairs the ability of MDCK II cells to form cysts in a three-dimensional matrix indicating the requirement of JAM-A for the development of apico-basal polarity. To define the regions of JAM-A important for this function, we have generated MDCK II cell lines stably expressing inducible JAM-A mutants. Mutants of JAM-A which were designed to mislocalize strongly impaired the development of cysts and the formation of functional tight junctions. Surprisingly, similar mutants that lacked the PDZ domain-binding motif at the C-terminus were still impaired in apico-basal polarity formation suggesting that additional regions within the cytoplasmic tail of JAM-A are important for the function of JAM-A. A JAM-A mutant lacking the first Ig-like domain necessary for homophilic binding localized to cell-cell contacts similar to wild-type JAM-A. However, despite this same localization, this mutant interfered with cell polarity and tight junction formation. Together our findings suggest an important role for JAM-A in the development of apico-basal polarity in epithelial cells and identify regions in JAM-A which are critical for this role.