Sexually reproducing animals segregate their germline from their soma. In addition to gamete-producing gonads, planarian and parasitic flatworm reproduction relies on yolk cell-generating accessory reproductive organs (vitellaria) supporting development of yolkless oocytes. Despite the importance of vitellaria for flatworm reproduction (and parasite transmission), little is known about this unique evolutionary innovation. Here, we examine reproductive system development in the planarian Schmidtea mediterranea, in which pluripotent stem cells generate both somatic and germ cell lineages. We show that a homolog of the pluripotency factor Klf4 is expressed in primordial germ cells (PGCs), presumptive germline stem cells (GSCs), and yolk cell progenitors. Knockdown of this klf4-like (klf4l) gene results in animals that fail to specify or maintain germ cells; surprisingly, they also fail to maintain yolk cells. We find that yolk cells display germ cell-like attributes and that vitellaria are structurally analogous to gonads. In addition to identifying a new proliferative cell population in planarians (yolk cell progenitors) and defining its niche, our work provides evidence supporting the hypothesis that flatworm germ cells and yolk cells share a common evolutionary origin.