Stem cell self-renewal and the daughter cell differentiation are tightly regulated by the respective niches, which produce extrinsic cues to support the proper development. In Drosophila ovary, Dpp is secreted from germline stem cell (GSC) niche and activates the BMP signaling in GSCs for their self-renewal. Escort cells (ECs) in differentiation niche restrict Dpp outside the GSC niche and extend protrusions to help with proper differentiation of the GSC daughter cells. Here we provide evidence that loss of large Maf transcriptional factor Traffic jam (Tj) blocks GSC progeny differentiation. Spatio-temporal specific knockdown experiments indicate that Tj is required in pre-adult EC lineage for germline differentiation control. Further molecular and genetic analyses suggest that the defective germline differentiation caused by tj-depletion is partly attributed to the elevated dpp in the differentiation niche. Moreover, our study reveals that tj-depletion induces ectopic En expression outside the GSC niche, which contributes to the upregulated dpp expression in ECs as well as GSC progeny differentiation defect. Alternatively, loss of EC protrusions and decreased EC number elicited by tj-depletion may also partially contribute to the germline differentiation defect. Collectively, our findings suggest that Tj in ECs regulates germline differentiation by controlling the differentiation niche characteristics.