The neurofibromatosis type 2 (NF2) tumor suppressor, Merlin, is a FERM (Four point one, Ezrin, Radixin, Moesin) domain-containing protein whose loss results in defective morphogenesis and tumorigenesis in multiple tissues. Like the closely related ERM proteins (Ezrin, Radixin, and Moesin), Merlin may organize the plasma membrane by assembling membrane protein complexes and linking them to the cortical actin cytoskeleton. We previously found that Merlin is a critical mediator of contact-dependent inhibition of proliferation and is required for the establishment of stable adherens junctions (AJs) in cultured cells. Here, we delineate the molecular function of Merlin in AJ establishment in epidermal keratinocytes in vitro and confirm that a role in AJ establishment is an essential function of Merlin in vivo. Our studies reveal that Merlin can associate directly with α-catenin and link it to Par3, thereby providing an essential link between the AJ and the Par3 polarity complex during junctional maturation.