The Piwi-piRNA (PIWI-interacting RNA) complex (Piwi-piRISC) in Drosophila ovarian somatic cells represses transposons transcriptionally to maintain genome integrity; however, the underlying mechanisms remain obscure. Here, we reveal that DmGTSF1, a Drosophila homolog of gametocyte-specific factor 1 (GTSF1) (which is required for transposon silencing in mouse testes), is necessary for Piwi-piRISC to repress target transposons and neighboring genes. DmGTSF1 depletion affected neither piRNA biogenesis nor nuclear import of Piwi-piRISC. DmGTSF1 mutations caused derepression of transposons and loss of ovary follicle layers, resulting in female infertility. We suggest that DmGTSF1, a nuclear Piwi interactor, is an integral factor in Piwi-piRISC-mediated transcriptional silencing.