The gastrointestinal epithelium serves as a critical barrier separating intestinal lumen contents from the underlying tissue environment. Structure and function of the apical junctional complex (AJC), comprising tight and adherens junctions, are essential for establishing and maintaining a polarized and functional epithelial barrier. In this study, we investigated mechanisms by which an apical polarity protein Crumbs homolog 3 (CRB3) regulates AJC assembly and barrier function in primary murine intestinal epithelial cells. Using primary colonic epithelial cells (colonoids) derived from inducible and conditional Crb3 knockdown (Crb3 ERΔIEC ) and control mice (Crb3 fl/fl ), we demonstrate that Crb3 loss leads to compromised epithelial barrier function that was associated with hypercontractile perijunctional actomyosin and defective assembly of the AJC. We identified CRB3 associates with the Band 4.1 family of cytoskeletal linker proteins, Merlin (NF2) via FERM (band4.1/ezrin/radixin/moesin) binding domain (FBD) of CRB3. Interestingly, NF2 knockdown in cultured intestinal epithelial cells phenocopied the effect of CRB3 deletion, supporting a coordinated role in AJC formation and barrier assembly. Moreover, increased active Rho was detected in assembling junctions of Crb3-null cells and inhibition of ROCKII and myosin II alleviated the hypercontractile phenotype, highlighting involvement of Rho/ROCK signaling. Additionally, increased vinculin localization at the AJC seen in Crb3-null epithelial cells indicates elevated tension at junctions. Our findings underscore the important role of Crb3 and NF2 in regulating contractility of the perijunctional actomyosin ring, mechanical tension at the AJC and barrier function via Rho/ROCK signaling during junctional assembly in intestinal epithelial cells.