Epithelial tissues undergo extensive structural remodeling during embryonic development. Tissue remodeling is often enabled by oriented cell rearrangements that are linked with patterns of mechanical stress in the tissue and with tissue mechanical properties. Cell rearrangements and their links to tissue structure have largely been studied at the apical side of tissues at the level of adherens junctions. Less is known about the involvement of basolateral domains in cell rearrangements. Here we use live confocal imaging to quantify cell rearrangements, cell packing structure, and cell morphology in 3D in the converging and extendingDrosophilagermband epithelium. We report gradients in cell shapes and tissue structure along the apical-basal axis of the germband, suggesting that the apical and basolateral domains display distinct behaviors. Cell rearrangements initiate at apical as well as basolateral positions, with initiation frequencies also displaying a gradient along the apical-basal axis. Following initiation, rearrangements propagate across the apical-basal axis and lateral cell contacts remodel; these events involve scutoids and other complex 3D cell shapes as intermediate states. These findings uncover novel aspects of the cell rearrangements that drive dynamic remodeling of epithelia and reveal links between rearrangements and gradients in tissue structure along the apical-basal axis.