Signalling by the GTPase RhoA, a key regulator of epithelial cell behaviour, can stimulate opposing processes: RhoA can promote junction formation and apical constriction, as well as reduced adhesion and cell spreading1, 2. Molecular mechanisms are thus required that ensure spatially restricted and process-specific RhoA activation. For many fundamental processes, including assembly of the epithelial junctional complex, such mechanisms are still unknown. Here we show that p114RhoGEF is a junction-associated protein that drives RhoA signalling at the junctional complex and regulates tight junction assembly and epithelial morphogenesis. p114RhoGEF is required for RhoA activation at cell-cell junctions, and its depletion stimulates non-junctional Rho signalling and induction of myosin phosphorylation along the basal domain. Depletion of GEF-H1, a RhoA activator inhibited by junctional recruitment3, does not reduce junction-associated RhoA activation. p114RhoGEF associates with a complex containing myosin II, Rock II and the junctional adaptor cingulin, indicating that p114RhoGEF is a component of a junction-associated Rho signalling module that drives spatially restricted activation of RhoA to regulate junction formation and epithelial morphogenesis.