Female germ cells develop into oocytes, with the capacity for totipotency. In most animals, these remarkable cells are specified during development and cannot be regenerated. By contrast, planarians, known for their regenerative prowess, can regenerate germ cells. To uncover mechanisms required for female germ cell development and regeneration, we generated gonad-specific transcriptomes and identified genes whose expression defines progressive stages of female germ cell development. Strikingly, early female germ cells share molecular signatures with the pluripotent stem cells driving planarian regeneration. We observe spatial heterogeneity within somatic ovarian cells and find that a regionally enriched foxL homolog is required for oocyte differentiation, but not specification, suggestive of functionally distinct somatic compartments. Unexpectedly, a neurotransmitter-biosynthetic enzyme, aromatic L-amino acid decarboxylase (AADC), is also expressed in somatic gonadal cells, and plays opposing roles in female and male germ cell development. Thus, somatic gonadal cells deploy conserved factors to regulate germ cell development and regeneration in planarians.