Early differentiation of the mammalian embryo leads to the development of two distinct lineages-the inner cell mass (ICM) and the trophectoderm. Cells of the ICM are pluripotent and give rise to all tissues of the fetus, while trophectoderm cells are restricted in their potential to the trophoblast cell layers of the placenta. In the mouse, apparently immortal stem cell lines can be obtained from both cell types. These cell lines, embryonic stem (ES) cells and trophoblast stem (TS) cells, are morphologically and molecularly distinct and depend on different signaling pathways for their maintenance. They also show different cell fates when introduced into early embryos to generate chimeras. However, a change in the levels of expression of a key regulator of pluripotency, Oct4, can push ES cells towards the TS phenotype, when grown in TS cell conditions. Stem cell potential in the early embryo thus appears to depend on a combination of the levels of expression of key intrinsic regulators and the appropriate extrinsic environmental factors. Manipulation of both intrinsic and extrinsic regulators may be needed to reveal the full potential of stem cells from other stages of development and the adult.