In Drosophila ovarian somatic cells (OSCs), Piwi forms piRISCs with piRNAs and transcriptionally represses transposons to maintain the genome integrity. Female sterile (1) Yb (Yb) is a primary component of Yb bodies, perinuclear foci considered to be the site of piRNA biogenesis in OSCs. Yb consists of three domains; Helicase C-terminal (Hel-C), RNA helicase and extended Tudor (eTud) domains. We previously showed that the RNA helicase domain is necessary for Yb-RNA interaction, Yb body formation and piRNA biogenesis. Here, we investigated the functions of Hel-C and eTud and revealed that Hel-C is dedicated for Yb-Yb homotypic interaction while eTud is necessary for Yb-RNA association as was the RNA helicase domain. All these domains were indispensable for Yb body formation and production of transposon-repressible piRNAs. Strikingly, however, genic piRNAs unrelated to transposon silencing were produced in OSCs where Yb bodies were disassembled. We also revealed that Yb bodies are liquid-like multivalent condensates whose assembly depends on Yb-Yb homotypic interaction and Yb binding particularly with flamenco RNA transcripts, the source of transposon-targeting piRNAs. New insights into Yb body assembly and biological relevance of Yb bodies in transposon silencing have emerged.