Hydra is a powerful stem cell model because its potential immortality and extensive regeneration capacity is due to the presence of three distinct stem cell lineages. All three lineages conform to a well-defined spatial distribution across the whole body column of the polyp. Stem cell function in Hydra is controlled by extracellular cues and intrinsic genetic programs. This review focuses on the elusive stem cell niche of the epithelial layers. Based on a comparison of the differences between, and commonalities among, stem cells and stem cell niches in Hydra and other invertebrates and vertebrates, we propose that the whole body column of the polyp may be considered a stem cell "niche" in which stem cell populations are established and signals ensuring the proper balance between stem cells and progenitor cells are integrated. We show that, at over 500 million years old, Hydra offers an early glimpse of the regulatory potential of stem cell niches.