Cell-cell interactions influence epithelial morphogenesis through an interplay between cell adhesion, trafficking and the cytoskeleton. These cellular processes are coordinated, often by cell signals found at cell-cell contacts. One such contact-based signal is the phosphatidylinositol 3'-kinase (PI3-kinase; PI3K) pathway. PI3-kinase is best understood for its role in mitogenic signalling, where it regulates cell survival, proliferation and differentiation. Its precise morphogenetic impacts in epithelia are, in contrast, less well-understood. Using phosphoinositide-specific biosensors we confirmed that E-cadherin-based cell-cell contacts are enriched in PIP(3), the principal product of PI3-kinase. We then used pharmacologic inhibitors to assess the morphogenetic impact of PI3-kinase in MDCK and MCF7 monolayers. We found that inhibiting PI3-kinase caused a reduction in epithelial cell height that was reversible upon removal of the drugs. This was not attributable to changes in E-cadherin expression or homophilic adhesion. Nor were there detectable changes in cell polarity. While Myosin II has been implicated in regulating keratinocyte height, we found no effect of PI3-kinase inhibition on apparent Myosin II activity; nor did direct inhibition of Myosin II alter epithelial height. Instead, in pursuing signalling pathways downstream of PI3-kinase we found that blocking Rac signalling, but not mTOR, reduced epithelial cell height, as did PI3-kinase inhibition. Overall, our findings suggest that PI3-kinase exerts a major morphogenetic impact in simple cultured epithelia through preservation of cell height. This is independent of potential effects on adhesion or polarity, but may occur through PI3-kinase-stimulated Rac signaling.