In several metazoans including flies of the genus Drosophila, germ line specification occurs through the inheritance of maternally deposited cytoplasmic determinants, collectively called germ plasm. The novel insect gene oskar is at the top of the Drosophila germ line specification pathway, and also plays an important role in posterior patterning. A novel N-terminal domain of oskar (the Long Oskar domain) evolved in Drosophilids, but the role of this domain in oskar functional evolution is unknown. Trans-species transgenesis experiments have shown that oskar orthologs from different Drosophila species have functionally diverged, but the underlying selective pressures and molecular changes have not been investigated. As a first step toward understanding how Oskar function could have evolved, we applied molecular evolution analysis to oskar sequences from the completely sequenced genomes of 16 Drosophila species from the Sophophora subgenus, Drosophila virilis and Drosophila immigrans. We show that overall, this gene is subject to purifying selection, but that individual predicted structural and functional domains are subject to heterogeneous selection pressures. Specifically, two domains, the Drosophila-specific Long Osk domain and the region that interacts with the germ plasm protein Lasp, are evolving at a faster rate than other regions of oskar. Further, we provide evidence that positive selection may have acted on specific sites within these two domains on the D. virilis branch. Our domain-based analysis suggests that changes in the Long Osk and Lasp-binding domains are strong candidates for the molecular basis of functional divergence between the Oskar proteins of D. melanogaster and D. virilis. This molecular evolutionary analysis thus represents an important step towards understanding the role of an evolutionarily and developmentally critical gene in germ plasm evolution and assembly.