Cell polarity is essential for generating cell diversity and for the proper function of most differentiated cell types. In many organisms, cell polarity is regulated by the atypical protein kinase C (aPKC), Bazooka (Baz/Par3), and Par6 proteins. Here, we show that Drosophila aPKC zygotic null mutants survive to mid-larval stages, where they exhibit defects in neuroblast and epithelial cell polarity. Mutant neuroblasts lack apical localization of Par6 and Lgl, and fail to exclude Miranda from the apical cortex; yet, they show normal apical crescents of Baz/Par3, Pins, Inscuteable, and Discs large and normal spindle orientation. Mutant imaginal disc epithelia have defects in apical/basal cell polarity and tissue morphology. In addition, we show that aPKC mutants show reduced cell proliferation in both neuroblasts and epithelia, the opposite of the lethal giant larvae (lgl) tumor suppressor phenotype, and that reduced aPKC levels strongly suppress most lgl cell polarity and overproliferation phenotypes.