Glial cells in the peripheral nerve wrap axons to insulate them and ensure efficient conduction of neuronal signals. In the myelin sheath, it is proposed that the autotypic tight junctions and adherens junctions form glia-glia complexes that stabilize the glia sheath in myelinating glia. Yet the role of adhesion junctions in non-myelinating glia of vertebrates or invertebrates has not been clearly established. Many components of adhering junctions contain PDZ (PSD-95, Dlg, ZO1) domains or are recruited to these junctions by PDZ binding motifs. To test for the role of PDZ domain proteins in glial sheath formation, we carried out an RNAi screen using Drosophila melanogaster to knockdown each of the 66 predicted PDZ domain proteins in the peripheral glia. We identified six PDZ genes with potential roles in glial morphology, and further investigated Discs-large 5 (Dlg5), a scaffolding protein with no previously known function in glia. Knockdown of Dlg5 disrupts subperineurial glia (SPG) morphology, including gaps in the membrane that coincide with disruption of septate junction proteins. To further our investigation of Dlg5, we focused on cadherins and found both N-Cadherin and E-Cadherin are expressed throughout peripheral glia. Knockdown of Ecad phenocopied the loss of Dlg5 leading to gaps in the SPG and septate junctions while only simultaneous loss of both N-Cadherins (Ncad, and CadN2) had the same effect. The loss of all three Cadherins enhanced these phenotypes as did loss of Dlg5 when paired with Cadherin knockdown. This leads to a model where Dlg5 plays a role in conjunction with Cadherins in glial membrane stabilization and SJ formation in the subperineurial glia.