Differentiating cells can dedifferentiate to replace stem cells in aged or damaged tissues, but the underlying mechanisms are unknown. In the Drosophila testis, a cluster of stromal cells called the hub creates a niche by locally activating Janus kinase-signal transducer and activator of transcription (Jak-STAT) signaling in adjacent germline and somatic stem cells. Here, we establish a system to study spermatogonial dedifferentiation. Ectopically expressing the differentiation factor bag-of-marbles (Bam) removes germline stem cells from the niche. However, withdrawing ectopic Bam causes interconnected spermatogonia to fragment, move into the niche, exchange positions with resident somatic stem cells, and establish contact with the hub. Concomitantly, actin-based protrusions appear on subsets of spermatogonia, suggesting acquired motility. Furthermore, global downregulation of Jak-STAT signaling inhibits dedifferentiation, indicating that normal levels of pathway activation are required to promote movement of spermatogonia into the niche during dedifferentiation, where they outcompete somatic stem cells for niche occupancy.