In all animals, germline cells differentiate in intimate contact with somatic cells and interactions between germline and soma are particularly important for germline development and function. In the male gonad of Drosophila melanogaster, the developing germline cells are enclosed by somatic cyst cells. The cyst cells are derived from cyst stem cells (CySCs) of somatic origin and codifferentiate with the germline cells. The fast generation cycle and the genetic tractability of Drosophila has made the Drosophila testis an excellent model for studying both the roles of somatic cells in guiding germline development and the interdependence of two separate stem cell lineages. This review focuses on our current understanding of CySC specification, CySC self-renewing divisions, cyst cell differentiation, and soma-germline interactions. Many of the mechanisms guiding these processes in Drosophila testes are similarly essential for the development and function of tissues in other organisms, most importantly for gametogenesis in mammals.