Previously, it has been shown that in Drosophila steroid hormones are required for progression of oogenesis during late stages of egg maturation. Here, we show that ecdysteroids regulate progression through the early steps of germ cell lineage. Upon ecdysone signalling deficit germline stem cell progeny delay to switch on a differentiation programme. This differentiation impediment is associated with reduced TGF-β signalling in the germline and increased levels of cell adhesion complexes and cytoskeletal proteins in somatic escort cells. A co-activator of the ecdysone receptor, Taiman is the spatially restricted regulator of the ecdysone signalling pathway in soma. Additionally, when ecdysone signalling is perturbed during the process of somatic stem cell niche establishment enlarged functional niches able to host additional stem cells are formed.