Germ cells complete multiple events to form functional oocytes and sperm. In the Caenorhabditis elegans hermaphrodite, germ cells develop in proximity to the somatic gonad sheath and spermathecal cells. We present evidence from cellular laser ablation studies indicating that cells of the somatic sheath and spermathecal lineages play critical roles in four events of hermaphrodite germline development. (1) Cells of the sheath and spermathecal lineage support germline proliferation: ablation of sheath/spermathecal precursor cells reduces mitotic proliferation. (2) These cells also play a role in the exit of germ cells from the pachytene stage of meiotic prophase and/or gamete differentiation; ablation can result in undifferentiated germ cells arrested in pachytene. (3) Proximal sheath and distal spermatheca cells are required for ovulation of the oocyte. During wild-type ovulation, the mature oocyte is expelled from the gonad arm by contraction of the proximal myoepithelial sheath and dilation of the distal spermatheca. Ablation of these cells traps mature oocytes in the gonad arm where they endomitotically replicate their DNA (the Emo phenotype). (4) Cells of the sheath and spermathecal lineage also appear to promote the male germ cell fate since ablation of one sheath/spermathecal precursor cell can feminize the hermaphrodite germ line. These somatic ablation-induced germline phenotypes demonstrate that the somatic gonad is required for multiple events in C. elegans germline development. Further, these results suggest that soma to germline cell-cell interactions in C. elegans are physiological in character (i.e., contraction during ovulation) as well as regulatory.