Post-transcriptional gene regulatory mechanisms allow cells to quickly respond to environmental variation without relying on nascent transcription. However, the role of these mechanisms in cell fate transitions in adult stem cell populations remain poorly understood. We address this question here by investigating the role of Processing bodies (P-bodies), a key site of post-transcriptional control, in adult Drosophila intestinal stem cells. We report that this cell type, but not surrounding differentiated cells, harbor P-bodies that contain Drosophila orthologs of mammalian P-body components DDX6, EDC3, EDC4 and LSM14A/B and are ultrastructurally organized in a “core-shell” structure. A targeted RNAi screen identified 100+ genes that affect normal P-body morphology including patr-1, which is required for mature P-body assembly. Using both verified patr-1 RNAi strains and newly generated patr-1 loss-of-function alleles, we show that P-body assembly defects correlate with loss of intestinal progenitors. RNA-seq analysis found that patr-1 mutant progenitors inappropriately express enterocyte (EC)-specific genes, leading to precocious EC differentiation. We further demonstrate that this process is independent of well-known transcriptional repressor escargot, indicating P-body-dependent post-transcriptional regulation of pro-differentiation genes. Taken together, this work delineates the importance of post-transcriptional mechanisms in adult stem cell maintenance.