The molecular mechanisms underlying pluripotency and lineage specification from embryonic stem cells (ESCs) are largely unclear. Differentiation pathways may be determined by the targeted activation of lineage-specific genes or by selective silencing of genome regions. Here we show that the ESC genome is transcriptionally globally hyperactive and undergoes large-scale silencing as cells differentiate. Normally silent repeat regions are active in ESCs, and tissue-specific genes are sporadically expressed at low levels. Whole-genome tiling arrays demonstrate widespread transcription in coding and noncoding regions in ESCs, whereas the transcriptional landscape becomes more discrete as differentiation proceeds. The transcriptional hyperactivity in ESCs is accompanied by disproportionate expression of chromatin-remodeling genes and the general transcription machinery. We propose that global transcription is a hallmark of pluripotent ESCs, contributing to their plasticity, and that lineage specification is driven by reduction of the transcribed portion of the genome.