The cellular microenvironment of the stem cell niche orchestrates the complex cellular and signalling interactions essential to stem cell self-renewal and differentiation. Proper organisation and positioning of the niche is critical for preventing stem cell loss and tissue degeneration, or conversely, emergence of cancer stem cells (CSCs) capable of unbridled proliferation. Here we demonstrate the RNA recognition motif (RRM) protein Half-pint (Hfp), which has been attributed dual functions in mRNA splicing and transcription, is a critical determinant of stem cell niche position and function. Strikingly, depletion of Hfp resulted in a phenomenon not previously reported in the Drosophila ovarian niche; being capable of establishing an ectopic niche supporting germline stem cell tumour formation in egg chambers far from the endogenous niche. We further demonstrate that transcriptional repression of dMYC, rather than splicing defects, underlie ectopic niche generation and germline tumour formation. Specifically, germ cell tumours were eliminated by concurrent knockdown of dMYC or the TFIIH complex subunit essential to Hfp-repression of dMYC, the Hay/XBP-helicase. Thus, Hfp-modulated repression of dMYC is critical to ensure proper expression of niche signalling factors necessary for proper germline stem cell division and differentiation.