Cell polarity has a fundamental role in shaping the morphology of cells and growing tissues. Polarity is commonly thought to be established in response to extracellular signals. Here we show that cell polarity forms in the absence of morphogen gradients in chondrogenic and myogenic differentiation. We demonstrate a key role for melanoma cell adhesion molecule (MCAM) in the initiation of cell polarity. We found highly polarized localization of MCAM, Moesin (MSN), Scribble (SCRIB) and Van-Gogh-like 2 (VANGL2) at the distal end of elongating myotubes. Knockout of MCAM or elimination of its endocytosis motif does not impair the initiation of myogenesis or myoblast fusion, but prevents myotube elongation. MSN, SCRIB and VANGL2 remain uniformly distributed in MCAM knockout cells. We show that MCAM dependent cell polarity is required at early stages of chondrogenic differentiation. In both myogenic and chondrogenic differentiation MCAM knockout leads to transcriptional downregulation of Scrib and enhanced MAP kinase activity. Our data demonstrates the importance of cell autonomous polarity in differentiation.