Convergent extension (CE) is a fundamental morphogenetic mechanism that underlies numerous processes in vertebrate development, and its disruption can lead to human congenital disorders such as neural tube closure defects. The dynamic, oriented cell intercalation during CE is regulated by a group of core proteins identified originally in flies to coordinate epithelial planar cell polarity (PCP). The existing model explains how core PCP proteins, including Van Gogh (Vang) and Dishevelled (Dvl), segregate into distinct complexes on opposing cell cortex to coordinate polarity among static epithelial cells. The action of core PCP proteins in the dynamic process of CE, however, remains an enigma. In this report, we show that Vangl2 (Vang-like 2) exerts dual positive and negative regulation on Dvl during CE in both the mouse and Xenopus. We find that Vangl2 binds to Dvl to cell-autonomously promote efficient Dvl plasma membrane recruitment, a pre-requisite for PCP activation. At the same time, Vangl2 inhibits Dvl from interacting with its downstream effector Daam1 (Dishevelled associated activator of morphogenesis 1), and functionally suppresses Dvl → Daam1 cascade during CE. Our finding uncovers Vangl2-Dvl interaction as a key bi-functional switch that underlies the central logic of PCP signaling during morphogenesis, and provides new insight into PCP-related disorders in humans.