Doublesex (Dsx) and Fruitless (Fru) are the two downstream transcription factors that actuate Drosophila sex determination. While Dsx assists Fru to regulate sex-specific behavior, whether Fru collaborates with Dsx in regulating other aspects of sexual dimorphism remains unknown. One important aspect of sexual dimorphism is found in the gonad stem cell (GSC) niches, where male and female GSCs are regulated to create large numbers of sperm and eggs. Here we report that Fru is expressed male-specifically in the GSC niche and plays important roles in the development and maintenance of these cells. Unlike previously-studied aspects of sex-specific Fru expression, which are regulated by Transformer (Tra)-mediated alternative splicing, we show that male-specific expression of fru in the gonad is regulated downstream of dsx, and is independent of tra. fru genetically interacts with dsx to support maintenance of the niche throughout development. Ectopic expression of fru inhibited female niche formation and partially masculinized the ovary. fru is also required autonomously for cyst stem cell maintenance and cyst cell survival. Finally, we identified a conserved Dsx binding site upstream of fru promoter P4 that regulates fru expression in the niche, indicating that fru is likely a direct target for transcriptional regulation by Dsx. These findings demonstrate that fru acts outside the nervous system to influence sexual dimorphism and reveal a new mechanism for regulating sex-specific expression of fru that is regulated at the transcriptional level by Dsx, rather than by alternative splicing by Tra.