The Crumbs (Crb) complex is a key regulator of epithelial cell architecture where it promotes apical membrane formation. Here, we show that binding of the FERM protein Yurt to the cytoplasmic domain of Crb is part of a negative-feedback loop that regulates Crb activity. Yurt is predominantly a basolateral protein but is recruited by Crb to apical membranes late during epithelial development. Loss of Yurt causes an expansion of the apical membrane in embryonic epithelia and photoreceptor cells similar to Crb overexpression and in contrast to loss of Crb. Analysis of yurt crb double mutants suggests that these genes function in one pathway and that yurt negatively regulates crb. We also show that the mammalian Yurt orthologs YMO1 and EHM2 bind to mammalian Crb proteins. We propose that Yurt is part of an evolutionary conserved negative-feedback mechanism that restricts Crb complex activity in promoting apical membrane formation.