All insect ovaries are composed of functional units called ovarioles, which contain sequentially developing egg chambers. The number of ovarioles varies between and within species. Ovariole number is an important determinant of fecundity and thus affects individual fitness. Although Drosophila oogenesis has been intensively studied, the genetic and cellular basis for determination of ovariole number remains unknown. Ovariole formation begins during larval development with the morphogenesis of terminal filament cells (TFCs) into stacks called terminal filaments (TFs). We induced changes in ovariole number in Drosophila melanogaster by genetically altering cell size and cell number in the TFC population, and analyzed TF morphogenesis in these ovaries to understand the cellular basis for the changes in ovariole number. Increasing TFC size contributed to higher ovariole number by increasing TF number. Similarly, increasing total TFC number led to higher ovariole number via an increase in TF number. By analyzing ovarian morphogenesis in another Drosophila species we showed that TFC number regulation is a target of evolutionary change that affects ovariole number. In contrast, temperature-dependent plasticity in ovariole number was due to changes in cell-cell sorting during TF morphogenesis, rather than changes in cell size or cell number. We have thus identified two distinct developmental processes that regulate ovariole number: establishment of total TFC number, and TFC sorting during TF morphogenesis. Our data suggest that the genetic changes underlying species-specific ovariole number may alter the total number of TFCs available to contribute to TF formation. This work provides for the first time specific and quantitative developmental tools to investigate the evolution of a highly conserved reproductive structure.