The formation of epithelial tissues containing lumens requires not only the apical-basolateral polarization of cells, but also the coordinated orientation of this polarity such that the apical surfaces of neighboring cells all point toward the central lumen. Defects in extracellular matrix (ECM) signaling lead to inverted polarity so that the apical surfaces face the surrounding ECM. We report a molecular switch mechanism controlling polarity orientation. ECM signals through a β1-integrin/FAK/p190RhoGAP complex to downregulate a RhoA/ROCK/Ezrin pathway at the ECM interface. PKCβII phosphorylates the apical identity-promoting Podocalyxin/NHERF1/Ezrin complex, removing Podocalyxin from the ECM-abutting cell surface and initiating its transcytosis to an apical membrane initiation site for lumen formation. Inhibition of this switch mechanism results in the retention of Podocalyxin at the ECM interface and the development instead of collective front-rear polarization and motility. Thus, ECM-derived signals control the morphogenesis of epithelial tissues by controlling the collective orientation of epithelial polarization.