The establishment of sexual identity is a crucial step of germ cell development in sexually reproducing organisms. Sex determination in the germline is controlled differently than in the soma, and often depends on communication from the soma. To investigate how sexual identity is established in the Drosophila germline, we first conducted a molecular screen for genes expressed in a sex-specific manner in embryonic germ cells. Sex-specific expression of these genes is initiated at the time of gonad formation (stage 15), indicating that sexual identity in the germline is established by this time. Experiments where the sex of the soma was altered relative to that of the germline (by manipulating transformer) reveal a dominant role for the soma in regulating initial germline sexual identity. Germ cells largely take on the sex of the surrounding soma, although the sex chromosome constitution of the germ cells still plays some role at this time. The male soma signals to the germline through the JAK/STAT pathway, while the nature of the signal from the female soma remains unknown. We also find that the genes ovo and ovarian tumor (otu) are expressed in a female-specific manner in embryonic germ cells, consistent with their role in promoting female germline identity. However, removing the function of ovo and otu, or reducing germline function of Sex lethal, had little effect on establishment of germline sexual identity. This is consistent with our findings that signals from the soma are dominant over germline autonomous cues at the initial stage of germline sex determination.