Throughout Drosophila oogenesis, specialized somatic follicle cells perform crucial functions in egg chamber formation and in signaling between somatic and germline cells. In the ovary, at least three types of somatic follicle cells, polar cells, stalk cells and main body epithelial follicle cells, can be distinguished when egg chambers bud from the germarium. Although specification of these three somatic cell types is important for normal oogenesis and subsequent embryogenesis, the molecular basis for establishment of their cell fates is not completely understood. Our studies reveal the gene eyes absent (eya) to be a key repressor of polar cell fate. EYA is a nuclear protein that is normally excluded from polar and stalk cells, and the absence of EYA is sufficient to cause epithelial follicle cells to develop as polar cells. Furthermore, ectopic expression of EYA is capable of suppressing normal polar cell fate and compromising the normal functions of polar cells, such as promotion of border cell migration. Finally, we show that ectopic Hedgehog signaling, which is known to cause ectopic polar cell formation, does so by repressing eya expression in epithelial follicle cells.