Limb development membrane protein-1 (LMBR1)/lipocalin-interacting membrane receptor (LIMR)-type proteins are putative nine-transmembrane receptors that are evolutionarily conserved across metazoans. However, their biological function is unknown. Here, we show that the fly family member Lilipod (Lili) is required for germline stem cell (GSC) self-renewal in theDrosophilaovary where it enhances bone morphogenetic protein (BMP) signaling.lilimutant GSCs are lost through differentiation, and display reduced levels of the Dpp transducer pMad and precocious activation of the master differentiation factorbam.Conversely, overexpressed Lili induces supernumerary pMad-positivebamP-GFP–negative GSCs. Interestingly, differentiation oflilimutant GSCs isbam-dependent; however, its effect on pMad is not. Thus, although it promotes stem cell self-renewal by repressing abam-dependent process, Lilipod enhances transduction of the Dpp signal independently of its suppression of differentiation. In addition, because Lili is still required by a ligand-independent BMP receptor, its function likely occurs between receptor activation and pMad phosphorylation within the signaling cascade. This first, to our knowledge, in vivo characterization of a LMBR1/LIMR-type protein in a genetic model reveals an important role in modulating BMP signaling during the asymmetric division of an adult stem cell population and in other BMP signaling contexts.