Stem cells reside in a particular microenvironment known as a niche. The interaction between extrinsic cues originating from the niche and intrinsic factors in stem cells determines their identity and activity. Maintenance of stem cell identity and stem cell self-renewal are known to be controlled by chromatin factors. Herein, we use the Drosophila adult testis which has two adult stem cell lineages, the germline stem cell (GSC) lineage and the cyst stem cell (CySC) lineage, to study how chromatin factors regulate stem cell differentiation. We find that the chromatin factor Enhancer of Polycomb [E(Pc)] acts in the CySC lineage to negatively control transcription of genes associated with multiple signaling pathways, including JAK-STAT and EGF, to promote cellular differentiation in the CySC lineage. E(Pc) also has a non-cell-autonomous role in regulating GSC lineage differentiation. When E(Pc) is specifically inactivated in the CySC lineage, defects occur in both germ cell differentiation and maintenance of germline identity. Furthermore, compromising Tip60 histone acetyltransferase activity in the CySC lineage recapitulates loss-of-function phenotypes of E(Pc), suggesting that Tip60 and E(Pc) act together, consistent with published biochemical data. In summary, our results demonstrate that E(Pc) plays a central role in coordinating differentiation between the two adult stem cell lineages in Drosophila testes.