Epithelial cells are characterized by apical-basal polarity. Intrinsic factors underlying apical-basal polarity are crucial for tissue homeostasis and have often been identified to be tumor suppressors. Patterning and differentiation of epithelia are key processes of epithelial morphogenesis and are frequently regulated by highly conserved extrinsic factors. However, due to the complexity of morphogenesis, the mechanisms of precise interpretation of signal transduction as well as spatiotemporal control of extrinsic cues during dynamic morphogenesis remain poorly understood. Wing posterior crossvein (PCV) formation in Drosophila serves as a unique model to address how epithelial morphogenesis is regulated by secreted growth factors. Decapentaplegic (Dpp), a conserved bone morphogenetic protein (BMP)-type ligand, is directionally trafficked from longitudinal veins (LVs) into the PCV region for patterning and differentiation. Our data reveal that the basolateral determinant Scribbled (Scrib) is required for PCV formation through optimizing BMP signaling. Scrib regulates BMP-type I receptor Thickveins (Tkv) localization at the basolateral region of PCV cells and subsequently facilitates Tkv internalization to Rab5 endosomes, where Tkv is active. BMP signaling also up-regulates scrib transcription in the pupal wing to form a positive feedback loop. Our data reveal a unique mechanism in which intrinsic polarity genes and extrinsic cues are coupled to promote robust morphogenesis.