Kibra, Merlin and Expanded function as upstream components of the Hippo pathway to regulate the activity of the core kinase complex, consisting of Hippo, Salvador and Warts. Previous biochemical studies indicated that Kibra, Merlin and Expanded form a complex and function together to activate the downstream kinases, but genetic experiments have suggested that Merlin and Kibra function in parallel to Expanded. To better understand the functional relationships between upstream components in relation to the core kinases, we have examined their functions in living tissues using fluorescently-tagged, endogenously expressed pathway components. Interestingly, while a recent study has shown that Expanded organizes pathway components in the apical junctional region of imaginal epithelial cells, we find that Merlin and Kibra organize a distinct signaling complex at the apical cortex that is medially rather than junctionally localized. Gain- and loss-of-function experiments indicate that Kibra plays a key role in organizing this apical medial signaling center by recruiting both Salvador and Hippo. Merlin functions to promote Kibra-mediated recruitment of Salvador. Furthermore, we have found that Crumbs, which is localized junctionally, functions to negatively regulate the activity of this signaling complex by tethering Kibra at the junctions, despite the fact that loss of function Crumbs mutants have a modest overgrowth phenotype. Together, our studies reveal the complexity with which Hippo pathway activity is regulated, and suggest new mechanisms for pathway control in developing epithelia.