The orb gene of Drosophila encodes sex-specific germ-line proteins that contain two RRM-type RNA-binding domains. Here we report the distribution of Orb protein in wild-type, tumorous, and orb mutant ovaries. The wild-type distribution of Orb protein during oogenesis resembles that of its RNA, preferentially accumulating in the cytoplasm of the developing oocyte shortly after the formation of the 16-cell cyst. As anticipated from its germ-line expression, mutations in orb lead to female sterility. Analysis of the effect of orb mutants on the distribution of RNAs known to be required for oocyte differentiation and polarity suggests that orb functions in RNA localization at multiple points during oogenesis. In addition, phenotypic characterization of the orb mutants indicates that the gene is required early in oogenesis for formation of the 16-cell cyst. It then functions in the differentiation of the oocyte and is required for the three-dimensional reorganization of the germ cells in the cyst as well as for the establishment of normal germ-line-soma interactions in the egg chamber.