The tight junction is the most apical intercellular junction of epithelial cells and regulates transepithelial permeability through the paracellular pathway. To examine possible functions for the tight junction-associated protein ZO-1, C-terminally truncated mutants and a deletion mutant of ZO-1 were epitope tagged and stably expressed in corneal epithelial cell lines. Only full-length ZO-1 and one N-terminal truncation mutant targeted to cell borders; other mutants showed variable cytoplasmic distributions. None of the mutants initially disrupted the localization of endogenous ZO-1. However, long-term stable expression of two of the N-terminal mutants resulted in a dramatic change in cell shape and patterns of gene expression. An elongated fibroblast-like shape replaced characteristic epithelial cobblestone morphology. In addition, vimentin and smooth muscle actin expression were up-regulated, although variable cytokeratin expression remained, suggesting a partial transformation to a mesenchymal cell type. Concomitant with the morphological change, the expression of the integral membrane tight junction protein occludin was significantly down-regulated. The localizations of endogenous ZO-1 and another family member, ZO-2, were disrupted. These findings suggest that ZO-1 may participate in regulation of cellular differentiation.