Gonad formation requires specific interactions between germ cells and specialized somatic cells, along with the elaborate morphogenetic movements of these cells to create an ovary or testis. We have identified mutations in the fear of intimacy (foi) gene that cause defects in the formation of the embryonic gonad in Drosophila. foi is of particular interest because it affects gonad formation without affecting gonad cell identity, and is therefore specifically required for the morphogenesis of this organ. foi is also required for tracheal branch fusion during tracheal development. E-cadherin/shotgun is similarly required for both gonad coalescence and tracheal branch fusion, suggesting that E-cadherin and FOI cooperate to mediate these processes. foi encodes a member of a novel family of transmembrane proteins that includes the closely related human protein LIV1. Our findings that FOI is a cell-surface protein required in the mesoderm for gonad morphogenesis shed light on the function of this new family of proteins and on the molecular mechanisms of organogenesis.