The role of p120-catenin in the function of classical cadherins is still enigmatic despite various studies. To elucidate its role, we examined the effect of p120-catenin on the N-cadherin-mediated localization of junctional proteins in epithelial cells in this study. Cadherin-deficient MIA PaCa-2 epithelial cells did not show linear localization of tight junction proteins ZO-1 and occludin. When N-cadherin was expressed in these cells, however, the resultant transfectant cells revealed strong cell adhesion activity and linear localization of ZO-1, occludin, and N-cadherin in the lateral membrane. When the p120-catenin-binding site of N-cadherin was disrupted, the linear localization of ZO-1 and occludin disappeared, and the mutant N-cadherin became localized more diffusely in the transfectant, although the cell adhesion activity did not change much. Knockdown of p120-catenin also resulted in the very weak localization of ZO-1 and occludin. A similar effect of p120-catenin on the localization of junctional proteins was obtained under more dynamic conditions in a wound healing assay. Moreover, p120-catenin was essential for the regulation of centrosome orientation in this healing assay. Taken together, the present data indicate that p120-catenin is essential for N-cadherin-mediated formation of proper junctional structures and thereby the establishment of the cell polarity. Similar results were obtained when E-cadherin mutants comparable to those of N-cadherin were used, suggesting that p120-catenin plays the same role in the function of other classical cadherins.