During cellularization, the Drosophila melanogaster embryo undergoes a transition from syncytial to cellular blastoderm with the de novo generation of a polarized epithelial sheet in the cortex of the embryo. This process couples cytokinesis with the establishment of apical, basal, and lateral membrane domains that are separated by two spatially distinct adherens-type junctions. In nullo mutant embryos, basal junctions fail to form at the onset of cellularization, leading to the failure of cleavage furrow invagination and the generation of multinucleate cells. Nullo is a novel protein that appears to stabilize the initial accumulation of cadherins and catenins as they form a mature basal junction. In this article we characterize a nullo homologue from D. virilis and identify conserved domains of Nullo that are required for basal junction formation. We also demonstrate that Nullo is a myristoylprotein and that the myristate group acts in conjunction with a cluster of basic amino acids to target Nullo to the plasma membrane. The membrane association of Nullo is required in vivo for its role in basal junction formation and for its ability to block apical junction formation when ectopically expressed during late cellularization.