Bag of Marbles (Bam) is known to function as a positive regulator of hematopoietic progenitor maintenance in the lymph gland blood cell-forming organ during Drosophila hematopoiesis. Here, we demonstrate a key function for Bam in cells of the lymph gland posterior signaling center (PSC), a cellular domain proven to function as a hematopoietic niche. Bam is expressed in PSC cells, and gene loss-of-function results in PSC overgrowth and disorganization, indicating that Bam plays a crucial role in controlling the proper development of the niche. It was previously shown that Insulin receptor (InR) pathway signaling is essential for proper PSC cell proliferation. We analyzed PSC cell number in lymph glands double-mutant for bam and InR pathway genes, and observed that bam genetically interacts with pathway members in the formation of a normal PSC. The elF4A protein is a translation factor downstream of InR pathway signaling, and functional knockdown of this crucial regulator rescued the bam PSC overgrowth phenotype, further supporting the cooperative function of Bam with InR pathway members. Additionally, we documented that the Retinoblastoma-family protein (Rbf), a proven regulator of cell proliferation, was present in cells of the PSC, with a bam function-dependent expression. By contrast, perturbation of Decapentaplegic or Wingless signaling failed to affect Rbf niche cell expression. Together, these findings indicate that InR pathway-Bam-Rbf functional interactions represent a newly identified means to regulate the correct size and organization of the PSC hematopoietic niche.