fringe encodes a glycosyltransferase that modulates the ability of the Notch receptor to be activated by its ligands. We describe studies of fringe function during early stages of Drosophila oogenesis. Animals mutant for hypomorphic alleles of fringe contain follicles with an incorrect number of germline cells, which are separated by abnormally long and disorganized stalks. Analysis of clones of somatic cells mutant for a null allele of fringe localizes the requirement for fringe in follicle formation to the polar cells, and demonstrates that fringe is required for polar cell fate. Clones of cells mutant for Notch also lack polar cells and the requirement for Notch in follicle formation appears to map to the polar cells. Ectopic expression of fringe or of an activated form of Notch can generate an extra polar cell. Our results indicate that fringe plays a key role in positioning Notch activation during early oogenesis, and establish a function for the polar cells in separating germline cysts into individual follicles.