Epithelial sheet spreading and fusion underlie important developmental processes. Well-characterized examples of such epithelial morphogenetic events have been provided by studies in Drosophila, and include embryonic dorsal closure, formation of the adult thorax and wound healing. All of these processes require the basic region-leucine zipper (bZIP) transcription factors Jun and Fos. Much less is known about morphogenesis of the fly abdomen, which involves replacement of larval epidermal cells (LECs) with adult histoblasts that divide, migrate and finally fuse to form the adult epidermis during metamorphosis. Here, we implicate Drosophila Activating transcription factor 3 (Atf3), the single ortholog of human ATF3 and JDP2 bZIP proteins, in abdominal morphogenesis. During the process of the epithelial cell replacement, transcription of the atf3 gene declines. When this downregulation is experimentally prevented, the affected LECs accumulate cell-adhesion proteins and their extrusion and replacement with histoblasts are blocked. The abnormally adhering LECs consequently obstruct the closure of the adult abdominal epithelium. This closure defect can be either mimicked and further enhanced by knockdown of the small GTPase Rho1 or, conversely, alleviated by stimulating ecdysone steroid hormone signaling. Both Rho and ecdysone pathways have been previously identified as effectors of the LEC replacement. To elicit the gain-of-function effect, Atf3 specifically requires its binding partner Jun. Our data thus identify Atf3 as a new functional partner of Drosophila Jun during development.