During Drosophila oogenesis, germline stem cells (GSCs) self-renew and differentiate to give rise to a mature egg. Self-renewal and differentiation of GSCs are regulated by both intrinsic mechanisms such as regulation of gene expression in the germ line and extrinsic signaling pathways from the surrounding somatic niche. Epigenetic mechanisms, including histone-modifying proteins, nucleosome remodeling complexes, and histone variants, play a critical role in regulating intrinsic gene expression and extrinsic signaling cues from the somatic niche. In the GSCs, intrinsic epigenetic modifiers are required to maintain a stem cell fate by promoting expression of self-renewal factors and repressing the differentiation program. Subsequently, in the GSC daughters, epigenetic regulators activate the differentiation program to promote GSC differentiation. During differentiation, the GSC daughter undergoes meiosis to give rise to the developing egg, containing a compacted chromatin architecture called the karyosome. Epigenetic modifiers control the attachment of chromosomes to the nuclear lamina to aid in meiotic recombination and the release from the lamina for karyosome formation. The germ line is in close contact with the soma for the entirety of this developmental process. This proximity facilitates signaling from the somatic niche to the developing germ line. Epigenetic modifiers play a critical role in the somatic niche, modulating signaling pathways in order to coordinate the transition of GSC to an egg. Together, intrinsic and extrinsic epigenetic mechanisms modulate this exquisitely balanced program.