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A specialised microenvironment, termed niche, provides extrinsic signals for the maintenance of residential stem cells. However, how residential stem cells maintain niche homeostasis and whether stromal niche cells could convert their fate into stem cells to replenish lost stem cells upon systemic stem cell loss remain largely unknown. Here, through systemic identification of JAK/STAT downstream targets in adult Drosophila testis, we show that Escargot (Esg), a member of the Snail family of transcriptional factors, is a putative JAK/STAT downstream target. esg is intrinsically required in cyst stem cells (CySCs) but not in germline stem cells (GSCs). esg depletion in CySCs results in CySC loss due to differentiation and non‐cell autonomous GSC loss. Interestingly, hub cells are gradually lost by delaminating from the hub and converting into CySCs in esg‐defective testes. Mechanistically, esg directly represses the expression of socs36E, the well‐known downstream target and negative regulator of JAK/STAT signalling. Finally, further depletion of socs36E completely rescues the defects observed in esg‐defective testes. Collectively, JAK/STAT target Esg suppresses SOCS36E to maintain CySC fate and repress niche cell conversion. Thus, our work uncovers a regulatory loop between JAK/STAT signalling and its downstream targets in controlling testicular niche homeostasis under physiological conditions. [ABSTRACT FROM AUTHOR]