Non-CG methylation is an unexplored epigenetic hallmark of pluripotent stem cells. Here we report that a reduction in non-CG methylation is associated with impaired differentiation capacity into endodermal lineages. Genome-wide analysis of 2,670 non-CG sites in a discovery cohort of 25 phenotyped human induced pluripotent stem cell (hiPSC) lines revealed unidirectional loss (Δβ=13%, P<7.4 × 10(-4)) of non-CG methylation that correctly identifies endodermal differentiation capacity in 23 out of 25 (92%) hiPSC lines. Translation into a simplified assay of only nine non-CG sites maintains predictive power in the discovery cohort (Δβ=23%, P<9.1 × 10(-6)) and correctly identifies endodermal differentiation capacity in nine out of ten pluripotent stem cell lines in an independent replication cohort consisting of hiPSCs reprogrammed from different cell types and different delivery systems, as well as human embryonic stem cell (hESC) lines. This finding infers non-CG methylation at these sites as a biomarker when assessing endodermal differentiation capacity as a readout.