Although the role of the actin cytoskeleton in morphogenesis of polarized epithelial sheets is generally accepted as centrally important, the regulation of actin dynamics in this process remains unclear. Here, we show that the pointed-end capping protein Tmod3 contributes to epithelial cell shape within confluent monolayers of polarized epithelial cells. Tmod3 localizes to lateral cell membranes in polarized epithelia of several cell types. Reduction of Tmod3 levels by shRNA leads to a loss of F-actin and tropomyosins from lateral cell membranes, and a decrease in epithelial cell height, without effects on localisation of tight junction or adherens junction proteins, or any apparent changes in cell-cell adhesion. Instead, distribution of alphaII-spectrin on lateral membranes is disrupted upon reduction of Tmod3 levels, suggesting that loss of Tmod3 function leads to destabilization and disassembly of tropomyosin-coated actin filaments followed by disorganization of the spectrin-based membrane skeleton on lateral membranes. These data demonstrate for the first time a role for pointed-end capping in morphology regulation of polarized epithelial cells through stabilization of F-actin on lateral membranes. We propose that Tmod3-capped tropomyosin-actin filaments provide crucial links in the spectrin membrane skeleton of polarized epithelial cells, enabling the membrane skeleton to maintain cell shape.