Correct patterning of cells within an epithelium is key to establishing their normal function. However, the precise mechanisms by which individual cells arrive at their final developmental niche remains poorly understood. We developed an optimized system for imaging the developing Drosophila retina, an ideal tissue for the study of cell positioning. Using this technique, we characterized the cellular dynamics of developing wild-type pupal retinas. We also analyzed two mutants affecting eye patterning and demonstrate that cells mutant for Notch or Roughest signaling were aberrantly dynamic in their cell movements. Finally, we establish a role for the adherens junction regulator P120-Catenin in retinal patterning through its regulation of normal adherens junction integrity. Our results indicate a requirement for P120-Catenin in the developing retina, the first reported developmental function of this protein in the epithelia of lower metazoa. Based upon our live visualization of the P120-Catenin mutant as well as genetic data, we conclude that P120-Catenin is acting to stabilize E-cadherin and adherens junction integrity during eye development.