Coordination of cell motility and adhesion is essential for concerted movement of tissues during animal morphogenesis. The Drosophila tracheal network is formed by branching, migration and fusion of tubular ectodermal epithelia. Tracheal tip cells, located at the end of each branch that is going to fuse, extend filopodia to search for targets and later change their cell shape to a seamless ring to allow passage of lumen. The cell adhesion molecule DE-cadherin accumulates at the site of contact to form a ring that marks the site of lumen entry and is essential for the fusion. DE-cadherin expression in tip cells of a subset of branches is dependent on escargot, a zinc finger gene expressed in all tip cells. Such escargot mutant tip cells failed to adhere to each other and continued to search for alternative targets by extending long filopodia. We present evidence indicating escargot positively regulates transcription of the DE-cadherin gene, shotgun. Overexpression of DE-cadherin rescued the defect in one of the fusion points in escargot mutants, demonstrating an essential role of DE-cadherin in target recognition and identifying escargot as a key regulator of cell adhesion and motility in tracheal morphogenesis.