The balance between stem cell self-renewal and differentiation is controlled by intrinsic factors and niche signals. In the Drosophila melanogaster ovary, some intrinsic factors promote germline stem cell (GSC) self-renewal, whereas others stimulate differentiation. However, it remains poorly understood how the balance between self-renewal and differentiation is controlled. Here we use D. melanogaster ovarian GSCs to demonstrate that the differentiation factor Bam controls the functional switch of the COP9 complex from self-renewal to differentiation via protein competition. The COP9 complex is composed of eight Csn subunits, Csn1-8, and removes Nedd8 modifications from target proteins. Genetic results indicated that the COP9 complex is required intrinsically for GSC self-renewal, whereas other Csn proteins, with the exception of Csn4, were also required for GSC progeny differentiation. Bam-mediated Csn4 sequestration from the COP9 complex via protein competition inactivated the self-renewing function of COP9 and allowed other Csn proteins to promote GSC differentiation. Therefore, this study reveals a protein-competition-based mechanism for controlling the balance between stem cell self-renewal and differentiation. Because numerous self-renewal factors are ubiquitously expressed throughout the stem cell lineage in various systems, protein competition may function as an important mechanism for controlling the self-renewal-to-differentiation switch.