In the Drosophila ovary, the Bicaudal-D (Bic-D) gene is required for the differentiation of one of 16 interconnected cystocyte sister cells into an oocyte. A new class of Bic-Dnull alleles reveals a novel requirement for Bic-D for zygotic viability. In the germ line, the null mutations show that developmental processes that take place in germarial region 1, even those that create asymmetry, are independent of Bic-D function. Bic-D is then required to establish oocyte identity in one cystocyte and is essential, not only for the oocyte-specific accumulation of all oocyte markers that we have tested so far, but also for the posterior migration of the oocyte. In addition, normal polarity amongst the nurse cells requires Bic-D, indicating that the creation of different nurse cell identities may depend on oocyte determination. Our results show that different processes in early oogenesis require different amounts of Bic-D in a process-specific way and certain later processes can proceed at low levels of Bic-D. This suggests that the patterning of the female germ line and the development of an oocyte depend on differential responses to a single activity that is capable of initiating distinct oogenesis processes and can establish different cell fates.