Multicellular organisms consist of a variety of cells of distinctive morphology, with the cell shapes often reproduced with astonishing accuracy between individuals and across species. The morphology of cells varies with tissues, and cell shape changes are of profound importance in many occasions of morphogenesis. To elucidate the mechanisms of cell shape determination and regulation is therefore an important issue. One of the simplest multicellular organisms is the freshwater polyp Hydra. Although much is known about patterning in this early branching metazoan, there is currently little understanding of how cells in Hydra regulate their shape in response to upstream signals. We previously reported generation of transgenic Hydra to trace cells and to study cell behavior in vivo in an animal at the basis of animal evolution. Here, we use a novel transgenic line which expresses enhanced green fluorescent protein (eGFP) specifically in the ectodermal epithelial cells to analyze the structure and shape of epithelial cells as they are recruited into specific regions along the body column and respond to upstream signals such as components of the canonical Wnt signaling pathway. As a general theme, in contrast to epithelial cells in more complex animals, ectodermal epithelial cells in Hydra are capable of drastic changes in structure, shape, and cell contact along the body column. The remarkable phenotypic plasticity of epithelial cells in response to positional signals allows Hydra to build its body with only a limited number of different cell types.