Drosophila melanogaster Piwi functions within the germline stem cells (GSCs) and the somatic niche to regulate GSC self-renewal and differentiation. How Piwi influences GSCs is largely unknown. We uncovered a genetic interaction between Piwi and c-Fos in the somatic niche that influences GSCs. c-Fos is a proto-oncogene that influences many cell and developmental processes. In wild-type ovarian cells, c-Fos is post-transcriptionally repressed by Piwi, which destabilized the c-Fos mRNA by promoting the processing of its 3' untranslated region (UTR) into Piwi-interacting RNAs (piRNAs). The c-Fos 3' UTR was sufficient to trigger Piwi-dependent destabilization of a GFP reporter. Piwi represses c-Fos in the somatic niche to regulate GSC maintenance and differentiation and in the somatic follicle cells to affect somatic cell disorganization, tissue dysmorphogenesis, oocyte maturation arrest, and infertility.