Piwi proteins and Piwi-interacting RNAs (piRNAs) repress transposable elements (TEs) from mobilizing in gonadal cells. To determine the spectrum of piRNA-regulated targets that may extend beyond TEs, we conducted a genome-wide survey for transcripts associated with PIWI and for transcripts affected by PIWI knockdown in Drosophila ovarian somatic sheet (OSS) cells, a follicle cell line expressing the Piwi pathway. Despite the immense sequence diversity among OSS cell piRNAs, our analysis indicates that TE transcripts are the major transcripts associated with and directly regulated by PIWI. However, several coding genes were indirectly regulated by PIWI via an adjacent de novo TE insertion that generated a nascent TE transcript. Interestingly, we noticed that PIWI-regulated genes in OSS cells greatly differed from genes affected in a related follicle cell culture, ovarian somatic cells (OSCs). Therefore, we characterized the distinct genomic TE insertions across four OSS and OSC lines and discovered dynamic TE landscapes in gonadal cultures that were defined by a subset of active TEs. Particular de novo TEs appeared to stimulate the expression of novel candidate long noncoding RNAs (lncRNAs) in a cell lineage-specific manner, and some of these TE-associated lncRNAs were associated with PIWI and overlapped PIWI-regulated genes. Our analyses of OSCs and OSS cells demonstrate that despite having a Piwi pathway to suppress endogenous mobile elements, gonadal cell TE landscapes can still dramatically change and create transcriptome diversity.