The Drosophila gene stand still (stil) encodes a novel protein required for survival, sexual identity and differentiation of female germ cells. Using specific antibodies, we show that the Stil protein accumulates in the nucleus of all female germ cells throughout development, and is transiently expressed during early stages of male germline differentiation. Changes of Stil subnuclear localization during oogenesis suggest an association with chromatin. Several mutant alleles, which are point mutations in the Stil N-terminal domain, encode proteins that no longer co-localized with chromatin. We find that Stil binds to many sites on polytene chromosomes with strong preference for decondensed chromatin. This localization is very similar to that of RNA polymerase II. We show that Stil is required for high levels of transcription of the ovarian tumor gene in germ cells. Expression of ovarian tumor in somatic cells can be induced by ectopic expression of Stil. Finally, we find that transient ubiquitous somatic expression of Stil results in lethality of the fly at all stages of development.