In Drosophila, male and female gametes begin development when a stem cell divides to produce a cyst precursor. Subsequently, four special divisions give rise to a cluster of 16 interconnected cystocytes that develop into a single egg or 64 sperm. We identified and characterized a gene, bag-of-marbles (bam), that disrupts cyst formation in both sexes. An apparent null mutation causes abnormal cysts to form containing an excess number of cells that cannot differentiate into gametes. bam function resides within a simple 2.2-kb transcription unit encoding a single 442-amino-acid protein that shows similarity to the product of the ovarian tumor gene. The specific expression of bam RNA within female cystoblasts suggested that it might be involved in the specific cell-cycle alterations that occur during cystocyte divisions.