Postnatal maturation of esophageal musculature involves proximal-to-distal replacement of smooth muscle with skeletal muscle by elusive mechanisms. We report that this process is impaired in mice lacking the cell surface receptor Cdo and identify the underlying developmental mechanism. A myogenic transition zone containing proliferative skeletal muscle precursor cells migrated in a proximal–distal direction, leaving differentiated myofibers in its wake. Distal to the transition zone, smooth muscle fascicles underwent a morphogenetic process whereby they changed their orientation relative to each other and to the lumen. Consequently, a path was cleared for the transition zone, and smooth muscle ultimately occupied only the distal-most esophagus; there was no loss of smooth muscle. Cdo−/− mice were specifically defective in fascicular reorientation, resulting in an aberrantly proximal skeletal–smooth muscle boundary. Furthermore, Cdo−/− mice displayed megaesophagus and achalasia, and their lower esophageal sphincter was resistant to nitric oxide–induced relaxation, suggesting a developmental linkage between patterning and sphincter function. Collectively, these results illuminate mechanisms of esophageal morphogenesis and motility disorders.