The maintenance of stem cells is central to generating diverse cell populations in many tissues throughout the life of an animal. Elucidating the mechanisms involved in how stem cells are formed and maintained is crucial to understanding both normal developmental processes and the growth of many cancers. Previously, we showed that Zfrp8/PDCD2 is essential for the maintenance of Drosophila hematopoietic stem cells. Here, we show that Zfrp8/PDCD2 is also required in both germline and follicle stem cells in the Drosophila ovary. Expression of human PDCD2 fully rescues the Zfrp8 phenotype, underlining the functional conservation of Zfrp8/PDCD2. The piRNA pathway is essential in early oogenesis, and we find that nuclear localization of Zfrp8 in germline stem cells and their offspring is regulated by some piRNA pathway genes. We also show that Zfrp8 forms a complex with the piRNA pathway protein Maelstrom and controls the accumulation of Maelstrom in the nuage. Furthermore, Zfrp8 regulates the activity of specific transposable elements also controlled by Maelstrom and Piwi. Our results suggest that Zfrp8/PDCD2 is not an integral member of the piRNA pathway, but has an overlapping function, possibly competing with Maelstrom and Piwi.