Somatic gonadal niche cells control the survival, differentiation, and proliferation of germline stem cells. The establishment of this niche-stem cell relationship is critical, and yet the precursors to these two cell types are often born at a distance from one another. The simple Caenorhabditis elegans gonadal primordium, which contains two somatic gonad precursors (SGPs) and two primordial germ cells (PGCs), provides an accessible model for determining how stem cell and niche cell precursors first assemble during development. To visualize the morphogenetic events that lead to formation of the gonadal primordium, we generated transgenic strains to label the cell membranes of the SGPs and PGCs and captured time-lapse movies as the gonadal primordium formed. We identify three distinct phases of SGP behavior: posterior migration along the endoderm towards the PGCs, extension of a single long projection around the adjacent PGC, and a dramatic wrapping over the PGC surfaces. We show that the endoderm and PGCs are dispensable for SGP posterior migration and initiation of projections. However, both tissues are required for the final positioning of the SGPs and the morphology of their projections, and PGCs are absolutely required for SGP wrapping behaviors. Finally, we demonstrate that the basement membrane component laminin, which localizes adjacent to the developing gonadal primordium, is required to prevent the SGPs from over-extending past the PGCs. Our findings provide a foundation for understanding the cellular and molecular regulation of the establishment of a niche-stem cell relationship.