Glutamate receptor interacting protein (GRIP) homologues, initially characterized in synaptic glutamate receptor trafficking, consist of seven PDZ domains (PDZDs), whose conserved arrangement is of unknown significance. The Drosophila GRIP homologue (DGrip) is needed for proper guidance of embryonic somatic muscles towards epidermal attachment sites, with both excessive and reduced DGrip activity producing specific phenotypes in separate muscle groups. These phenotypes were utilized to analyze the molecular architecture underlying DGrip signaling function in vivo. Surprisingly, removing PDZDs 1-3 (DGripDelta1-3) or deleting ligand binding in PDZDs 1 or 2 convert DGrip to excessive in vivo activity mediated by ligand binding to PDZD 7. Yeast two-hybrid screening identifies the cell adhesion protein Echinoid's (Ed) type II PDZD-interaction motif as binding PDZDs 1, 2 and 7 of DGrip. ed loss-of-function alleles exhibit muscle defects, enhance defects caused by reduced DGrip activity and suppress the dominant DGripDelta1-3 effect during embryonic muscle formation. We propose that Ed and DGrip form a signaling complex, where competition between N-terminal and the C-terminal PDZDs of DGrip for Ed binding controls signaling function.