The intricately regulated differentiation of the somatic follicle cell lineages into distinct subpopulations with specific functions plays an essential role in Drosophila egg development. At early oogenesis, induction of the stalk cells generates the first anteroposterior (AP) asymmetry in the egg chamber by inducing the posterior localization of the oocyte. Later, the properly specified posterior follicle cells signal to polarize the oocyte along the AP and dorsoventral (DV) axes at mid-oogenesis. Here, we show that lethal(2)giant larvae (lgl), a Drosophila tumor suppressor gene, is required in the follicle cells for the differentiation of both stalk cells and posterior follicle cells. Loss-of-function mutations in lgl cause oocyte mispositioning in the younger one of the fused chambers, due to lack of the stalk. Removal of lgl function from the posterior follicle cells using the FLP/FRT system results in loss of the oocyte polarity that is elicited by the failure of those posterior cells to differentiate normally. Thus, we provide the first demonstration that lgl is implicated in the formation of the initial AP asymmetry and the patterning of the AP and DV axes in the oocyte by acting in the specification of a subset of somatic follicle cells.