Drosophila germ-line stem cells (GSCs) provide an excellent model to study the regulatory mechanisms of stem cells in vivo. Bag of marbles (bam) has been demonstrated to be necessary and sufficient to promote GSC and cystoblast differentiation. Despite extensive investigation of its regulation and genetic functions, the biochemical nature of the Bam protein has been unknown. Here, we report that Bam is an ubiquitin-associated protein and controls the turnover of cyclin A (CycA). Mechanistically, we found that Bam associated with Otu to form a deubiquitinase complex that stabilized CycA by deubiquitination, thus providing a mechanism to explain how ectopic expression of Bam in GSCs promotes differentiation. Collectively, our findings not only identify a biochemical function of Bam, which contributes to GSC fate determination, but also emphasizes the critical role of proper expression of cyclin proteins mediated by both ubiquitination and deubiquitination pathways in balancing stem cell self-renewal and differentiation.