In contrast to our significant understanding of signaling cascades that determine cell polarity in lower eukaryotic or immortalized cells, little is known about the transcriptional program that governs mammalian epithelial polarization in vivo. Here we show, using conditional gene ablation and three-dimensional tissue culture, that the homeobox transcription factor Cdx2 controls apical-basolateral polarity in mouse enterocytes and human colonic epithelial cells. Cdx2 regulates a comprehensive gene network involved in endo-lysosomal maturation and protein transport. In the absence of Cdx2, defective protein trafficking impairs apical-basal transport and induces ectopic lumen formation. These defects are partially recapitulated by suppression of key apical transport components, Rab11a and Kif3b, which are regulated by Cdx2. Furthermore, Cdx2 deficiency affects components that control the organization of microvillus actin cytoskeleton, leading to severe microvillus atrophy. These results demonstrate that Cdx2 regulates epithelial cell polarity and morphogenesis through control of apical protein transport and endo-lysosomal function.