Tubular networks are central to the structure and function of many organs, such as the vertebrate lungs or the Drosophila tracheal system. Their component epithelial cells are able to proliferate and to undergo complex morphogenetic movements, while maintaining their barrier function. Little is known about the details of the mitotic process in tubular epithelia. Our study presents a comprehensive model of cellular remodeling and proliferation in the dorsal branches of third-instar Drosophila larvae. Through a combination of immunostaining and novel live imaging techniques, we identify the key steps in the transition from a unicellular to a multicellular tube. Junctional remodeling precedes mitosis and, as the cells divide, new junctions are formed through several variations of what we refer to as 'asymmetric cytokinesis'. Depending on the spacing of cells along the dorsal branch, mitosis can occur either before or after the transition to a multicellular tube. In both instances, cell separation is accomplished through asymmetric cytokinesis, a process that is initiated by the ingression of the cytokinetic ring. Unequal cell compartments are a possible but rare outcome of completing mitosis through this mechanism. We also found that the Dpp signaling pathway is required but not sufficient for cell division in the dorsal branches.