The anatomical organization of the Drosophila ommatidia is achieved by specification and contextual placement of photoreceptors, cone and pigment cells. The photoreceptors must be sealed from high ionic concentrations of the hemolymph by a barrier to allow phototransduction. In vertebrates, a blood-retinal barrier (BRB) is established by tight junctions (TJs) present in the retinal pigment epithelium and endothelial membrane of the retinal vessels. In Drosophila ommatidia, the junctional organization and barrier formation is poorly understood. Here we report that septate junctions (SJs), the vertebrate analogs of TJs, are present in the adult ommatidia and are formed between and among the cone and pigment cells. We show that the localization of Neurexin IV (Nrx IV), a SJ-specific protein, coincides with the location of SJs in the cone and pigment cells. Somatic mosaic analysis of nrx IV null mutants shows that loss of Nrx IV leads to defects in ommatidial morphology and integrity. nrx IV hypomorphic allelic combinations generated viable adults with defective SJs and displayed a compromised blood-eye barrier (BEB) function. These findings establish that SJs are essential for ommatidial integrity and in creating a BEB around the ion and light sensitive photoreceptors. Our studies may provide clues towards understanding the vertebrate BEB formation and function.