Polarity is a fundamental cellular feature that is critical for generating cell diversity and maintaining organ functions during development. In C. elegans, the onecell embryo is polarized via asymmetric localization of the PAR proteins, which in turn are required to establish the future anterior-posterior axis of the embryo. PAR-3, a conserved PDZ domain-containing protein, acts with PAR-6 and PKC-3 (atypical protein kinase; aPKC) to regulate cell polarity and junction formation in a variety of cell types. To understand how PAR-3 localizes and functions during C. elegans development, we have produced targeted mutations and deletions of conserved domains of PAR-3 and examined the localization and function of the GFP-tagged proteins in C. elegans embryos and larvae. We find that neither PDZ1 not nor PDZ3 are essential for localization or function. PDZ2, however, is required for PAR-3 to accumulate stably at the cell periphery in early embryos and at the apical surface in pharyngeal and intestinal epithelial cells. CR1, the PAR-3 self-oligomerization domain, is required for PAR-3 cortical distribution and function only during early embryogenesis. We also show that phosphorylation at S863 by PKC-3 is not essential in early embryogenesis, but is important in later development. Our results indicate that the different domains and phosphorylation forms of PAR-3 can have different roles during C. elegans development.