Cadherin shedding affects migration and occurs in development and cancer progression. By examining the in vivo biological function of the extracellular cadherin domain (CEC1-5) independently of the shedding process itself, we identified a novel function for cadherins in convergent extension (CE) movements in Xenopus. CEC1-5 interfered with CE movements during gastrulation. Unexpectedly, CEC1-5 did not alter cell aggregation or adhesion to cadherin substrates. Instead, gastrulation defects were rescued by a membrane-anchored cadherin cytoplasmic domain, the polarity protein atypical PKC (aPKC) or constitutive active Rac, indicating that CEC1-5 modulates a cadherin-dependent signalling pathway. We found that the cadherin interacts with aPKC and, more importantly, that the extracellular domain alters this association as well as the phosphorylation status of aPKC. This suggests that CE movements require a dynamic regulation of cadherin-aPKC interaction. Our results show that cadherins play a dual role in CE movements: a previously identified adhesive activity and an adhesion-independent function that requires aPKC and Rac, thereby directly connecting cadherins with polarity. Our results also suggest that increased cadherin shedding, often observed in cancer progression, can regulate migration and invasion by modulating polarity protein activity.