The large absorptive surface area of the small intestine is imparted by finger-like projections called villi. Villi formation is instructed by stromal-derived clusters of cells which have been proposed to induce epithelial bending through actomyosin contraction. Their functions in the elongation of villi have not been studied. Here, we explored the function of mesenchymal contractility at later stages of villus morphogenesis. We induced contractility specifically in the mesenchyme of the developing intestine through inducible overexpression of the RhoA GTPase activator Arhgef11. This resulted in overgrowth of the clusters through a YAP-mediated increase in cell proliferation. While epithelial bending occurred in the presence of contractile clusters, the resulting villi had architectural defects, being shorter and wider than controls. These villi also had defects in epithelial organization and the establishment of nutrient-absorbing enterocytes. While ectopic activation of YAP resulted in similar cluster overgrowth and wider villi, it did not affect villus elongation or enterocyte differentiation, demonstrating roles for contractility in addition to proliferation. We find that the specific contractility-induced effects were dependent upon cluster interaction with the extracellular matrix. Together, these data demonstrate effects of contractility on villus morphogenesis and distinguish separable roles for proliferation and contractility in controlling intestinal architecture.