Stem cells are thought to reside in regulatory microenvironments ("niches") generated by stable stromal neighbors. To investigate the significance of empty niches vacated by stem cell loss, we studied Drosophila ovarioles, which maintain two to three germ-line stem cells in a niche requiring adhesive stromal cap cells and Decapentaplegic signals. After experimentally emptying the germ-line stem cell niche, cap cell activity persists for several weeks. Initially, somatic inner germarium sheath cells enter the empty niche, respond to Dpp, but fail to divide. Subsequently, follicle cell progenitors, including somatic stem cells enter the niche, respond to Dpp, and proliferate as long as cap cells remain. Proliferation requires the normal hedgehog signal of the somatic stem cells as well as proximity to the niche. Thus, empty niches can persist, signal incoming cells, and support ectopic proliferation. Similar events may underlie some disease states.