Bone morphogenetic proteins (BMPs) are a group of multifunctional cytokines and metabologens highly conserved in the transforming growth factor-β (TGF-β) superfamily. BMPs have an established role in controlling cell fate and tissue morphogenesis in a diverse range of organisms and are known to maintain stem cells in adult Drosophila testes. Additional studies in embryonic and larval testes suggest BMP regulates germ cell behavior. However, the roles of BMP signaling in controlling testis stem cell formation have yet to be directly examined. Here, we explore the pattern of BMP activation during embryonic testis niche morphogenesis as well as niche maturation in larval testes. We also assess the impact of altered BMP signaling on these stages of development. Our data suggest that BMP signaling is critical for promoting germ cell identity in primordial germ cells during embryonic niche formation. During niche maturation, we also find that that BMP signaling is both necessary and sufficient for maintenance of a self- renewing germline stem cell (GSC) population, and that newly formed cyst stem cells (CySCs) are a source of BMP activating ligand. As development progresses, however, BMP activation is no longer sufficient to alter GSC self-renewal. Collectively, our work promotes a more thorough understanding of BMP as a key mechanism controlling stem cell development in Drosophila testes that has implications for the development of other organ systems.