Mouse embryonic stem cells (ESCs) represent the naïve ground state of the 
preimplantation epiblast and epiblast stem cells (EpiSCs) represent the primed 
state of the postimplantation epiblast. Studies have revealed that the ESC state 
is maintained by a dynamic mechanism characterized by cell-to-cell spontaneous 
and reversible differences in sensitivity to self-renewal and susceptibility to 
differentiation. This metastable condition ensures indefinite self-renewal and, 
at the same time, predisposes ESCs for differentiation to EpiSCs. Despite 
considerable advances, the molecular mechanism controlling the ESC state and 
pluripotency transition from ESCs to EpiSCs have not been fully elucidated. Here 
we show that Otx2, a transcription factor essential for brain development, plays 
a crucial role in ESCs and EpiSCs. Otx2 is required to maintain the ESC 
metastable state by antagonizing ground state pluripotency and promoting 
commitment to differentiation. Furthermore, Otx2 is required for ESC transition 
into EpiSCs and, subsequently, to stabilize the EpiSC state by suppressing, in 
pluripotent cells, the mesendoderm-to-neural fate switch in cooperation with 
BMP4 and Fgf2. However, according to its central role in neural development and 
differentiation, Otx2 is crucially required for the specification of ESC-derived 
neural precursors fated to generate telencephalic and mesencephalic neurons. We 
propose that Otx2 is a novel intrinsic determinant controlling the functional 
integrity of ESCs and EpiSCs.