The stem cell niche utilizes short-range signalling, such that only stem cells but not their differentiating progeny receive self-renewing signals. A cellular projection, the microtubule-based nanotube (MT-nanotube), projects from Drosophila male germline stem cells (GSCs) into niche, hub cells, ensuring that GSC-produced receptor Thickveins (Tkv) receives sufficient hub-produced ligand Decapentaplegic (Dpp) while excluding non-stem cells from self-renewing signal activation. Here we show that

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... SC-produced Tkv is taken up by hub cells from the MT-nanotube and degraded in lysosomes. Failure of the hub cells to take up Tkv, or perturbation of hub cell lysosomal function lead to excess Tkv within GSCs, elevated downstream signal activation, and GSC tumor formation in non-niche locations. We propose that down-regulation of the self-renewal factor receptor by niche cells restricts the ligand/receptor interaction to the surface of the MT-nanotube membrane, fine-tuning the span of the short-range niche-stem cell signalling, and that this may be a general feature of contact-dependent signalling.