The adult mammalian intestine is composed of two connected structures, the absorptive villi and the crypts, which house progenitor cells. Mouse crypts develop postnatally and are the architectural unit of the stem cell niche, yet the pathways that drive their formation are not known. Here, we combine transcriptomic, quantitative morphometric, and genetic analyses to identify mechanisms of crypt development. We uncover the upregulation of a contractility gene network at the earliest stage of crypt formation, which drives myosin II-dependent apical constriction and invagination of the crypt progenitor cells. Subsequently, hinges form, compartmentalizing crypts from villi. Hinges contain basally constricted cells, and this cell shape change was inhibited by increased hemidesmosomal adhesion in Rac1 null mice. Loss of hinges resulted in reduced villar spacing, revealing an unexpected role for crypts in tissue architecture and physiology. These studies provide a framework for studying crypt morphogenesis and identify essential regulators of niche formation.