Septate junctions (SJs) are specialized intercellular junctions that restrict the free diffusion of solutes through the paracellular route in invertebrate epithelia. In arthropods, two morphologically different types of SJs have been reported: pleated SJs and smooth SJs (sSJs), which are found in ectodermally and endodermally derived epithelia, respectively. However, the molecular and functional differences between these SJ types have not been fully elucidated. Here, we report that a novel sSJ-specific component, a single-pass transmembrane protein, which we term 'Mesh' (encoded by CG31004), is highly concentrated in Drosophila sSJs. Compromised mesh expression causes defects in the organization of sSJs, in the localizations of other sSJ proteins, and in the barrier function of the midgut. Ectopic expression of Mesh in cultured cells induces cell-cell adhesion. Mesh forms a complex with Ssk, another sSJ-specific protein, and these proteins are mutually interdependent for their localization. Thus, a novel protein complex comprising Mesh and Ssk has an important role in sSJ formation and in intestinal barrier function in Drosophila.