Stem cells generate many differentiated, short-lived cell types, such as blood, skin, and sperm, throughout adult life. Stem cells maintain a long-term capacity to divide, producing daughter cells that either self-renew or initiate differentiation. Although the surrounding microenvironment or “niche” influences stem cell fate decisions, few signals that emanate from the niche to specify stem cell self-renewal have been identified. Here we demonstrate that the apical hub cells in the Drosophila testis act as a cellular niche that supports stem cell self-renewal. Hub cells express the ligand Unpaired (Upd), which activates the Janus kinase–signal transducer and activator of transcription (JAK-STAT) pathway in adjacent germ cells to specify self-renewal and continual maintenance of the germ line stem cell population.