Stem cells are often maintained within specialised environments, termed niches, but the developmental events controlling the assembly of such niches are poorly understood. Here, Andriy Yatsenko and Halyna Shcherbata report that a single miRNA, miR-125, coordinates Notch and steroid signalling during germline stem cell (GSC) niche formation in the Drosophila ovary. The ovarian GSC niche unit consists of eight or nine terminal filament cells (TFCs) and six cap cells (CpCs), and the authors first demonstrate that CpCs originate following a Notch-based peripheral induction process; during this event, the posterior-most TFC becomes a Notch signal-sending cell and triggers spatial patterning and CpC fate acquisition in adjacent cells. Following on from this, they show that the initial TFC switch in Notch signalling status is driven by miR-125, which is temporally induced by the steroid hormone ecdysone and targets an antagonist of Notch signalling, Tom. Finally, by analysing various mutants, the researchers demonstrate that disruptions to the steroid-miR-125-Notch signalling cascade result in enlarged or ectopic niches. Overall, these and other findings suggest that the miRNA-based coordination of key signalling pathways can explain how the GSC niche is assembled in a spatiotemporal manner.