In the Drosophila ovary, somatic escort cells (ECs) form a niche that promotes differentiation of germline stem cell (GSC) progeny. The piRNA (Piwi-interacting RNA) pathway, which represses transposable elements (TEs), is required in ECs to prevent the accumulation of undifferentiated germ cells (germline tumor phenotype). The soma-specific piRNA cluster flamenco (flam) produces a substantial part of somatic piRNAs. Here, we characterized the biological effects of somatic TE activation on germ cell differentiation in flam mutants. We revealed that the choice between normal and tumorous phenotypes of flam mutant ovaries depends on the number of persisting ECs, which is determined at the larval stage. Accordingly, we found much more frequent DNA breaks in somatic cells of flam larval ovaries than in adult ECs. The absence of Chk2 or ATM checkpoint kinases dramatically enhanced oogenesis defects of flam mutants, in contrast to the germline TE-induced defects that are known to be mostly suppressed by сhk2 mutation. These results demonstrate a crucial role of checkpoint kinases in protecting niche cells against deleterious TE activation and suggest substantial differences between DNA damage responses in ovarian somatic and germ cells.