Drosophila Discs large (Dlg) is a tumor suppressor gene whose loss in epithelial tissues causes disrupted cell polarity and increased cell proliferation. A human Dlg homolog, hDlg, has been implicated in tumorigenic processes via its association with the product of the Adenomatous Polyposis Coli (APC) gene. We show for the first time that Drosophila Dlg is required to block cell invasion. Loss of dlg activity during oogenesis causes follicle cells to change shape and invade in a pattern similar to border cells, a small population of cells that break from the post-mitotic follicular epithelium during wild-type oogenesis, yet dlg mutant cells have not adopted a border cell fate. Both functional and morphological evidence indicates that cooperation between germ cell and follicle cell Dlg, probably mediated by Dlg PDZ domains, is crucial for regulating cell mixing, suggesting a novel developmental mechanism and mode of action for the Dlg family of molecules. These findings suggest that Dlg does not simply inhibit individual cell behaviors during oogenesis, but rather acts in a developmental pathway essential for blocking cell proliferation and migration in a spatio-temporally defined manner. A model for Dlg action in blocking cell invasion is presented.