In Drosophila, PIWI proteins and bound PIWI-interacting RNAs (piRNAs) form the core of a small RNA-mediated defense system against selfish genetic elements. Within germline cells, piRNAs are processed from piRNA clusters and transposons to be loaded into Piwi/Aubergine/AGO3 and a subset of piRNAs undergoes target-dependent amplification. In contrast, gonadal somatic support cells express only Piwi, lack signs of piRNA amplification and exhibit primary piRNA biogenesis from piRNA clusters. Neither piRNA processing/loading nor Piwi-mediated target silencing is understood at the genetic, cellular or molecular level. We developed an in vivo RNAi assay for the somatic piRNA pathway and identified the RNA helicase Armitage, the Tudor domain containing RNA helicase Yb and the putative nuclease Zucchini as essential factors for primary piRNA biogenesis. Lack of any of these proteins leads to transposon de-silencing, to a collapse in piRNA levels and to a failure in Piwi-nuclear accumulation. We show that Armitage and Yb interact physically and co-localize in cytoplasmic Yb bodies, which flank P bodies. Loss of Zucchini leads to an accumulation of Piwi and Armitage in Yb bodies, indicating that Yb bodies are sites of primary piRNA biogenesis.