Many stem cell populations interact with stromal cells via signaling pathways, and understanding these interactions is key for understanding stem cell biology. In Drosophila, germline stem cell (GSC) maintenance requires regulation of several genes, including dpp, piwi, pumilio, and bam. GSCs also maintain continuous contact with cap cells that probably secrete the signaling ligands necessary for controlling expression of these genes. For example, dpp signaling acts by silencing transcription of the differentiation factor, bam, in GSCs. Despite numerous studies, it is not clear what roles piwi, primarily a cap cell factor, and pumilio, a germ cell factor, play in maintaining GSC function. With molecular and genetic experiments, we show that piwi maintains GSCs by silencing bam. In contrast, pumilio is not required for bam silencing, indicating that pumilio maintains GSC fate by a mechanism not dependent on bam transcription. Surprisingly, we find that germ cells can differentiate without bam if they also lack pumilio. These findings suggest a molecular pathway for GSC maintenance. dpp- and piwi-dependent signaling act synergistically in GSCs to silence bam, whereas pumilio represses translation of differentiation-promoting mRNAs. In cystoblasts, accumulating Bam protein antagonizes pumilio, permitting the translation of cystoblast-promoting transcripts.