Recent studies have demonstrated that the Ten-eleven translocation (Tet) family proteins can enzymatically convert 5-methylcytosine (5mC) to 5-hydroxymethylcytosine (5hmC). While 5mC has been studied extensively, little is known about the distribution and function of 5hmC. Here we present a genome-wide profile of 5hmC in mouse embryonic stem (ES) cells. A combined analysis of global 5hmC distribution and gene expression profile in wild-type and Tet1-depleted ES cells suggests that 5hmC is enriched at both gene bodies of actively transcribed genes and extended promoter regions of Polycomb-repressed developmental regulators. Thus, our study reveals the first genome-wide 5hmC distribution in pluripotent stem cells, and supports its dual function in regulating gene expression.