OCT4 plays a critical role in maintaining stem cell pluripotency in a dose-dependent manner by activating and repressing multiple downstream genes. The precise mechanism by which OCT4 achieves these diverse biological functions remains unknown. In this report, we identify and characterize (195)RKRKR as a nuclear localization signal responsible for its localization in the nuclei and required for the transactivation of its target genes. Point mutations within this motif yielded a mutant that localizes randomly throughout the cells and is defective in transactivating target genes. However, restoration of nuclear localization with a heterologous nuclear localization signal failed to rescue its transactivation function, suggesting that this (195)RKRKR motif has additional function in mediating transactivation function. We further demonstrate that this mutant is competent in dimerization with not only itself but also wild type OCT4 and can interfere with the activity of wild type OCT4, thus acting as a dominant negative mutant. Indeed, this mutant can induce the differentiation of P19 cells into trophoblast-like giant cells. These data suggest that this dominant negative form of OCT4 may be a useful tool for modulating the activity of OCT4 in pluripotent cells such as embryonic stem cells to achieve the desired cell types for therapeutic applications.