Understanding how to direct the fate of embryonic stem (ES) cells upon differentiation is critical to their eventual use in therapeutic applications. Clues for controlling ES cell differentiation may be found in the early embryo because mouse ES cells form derivatives of all three embryonic germ layers upon injection into blastocysts. One promising candidate for influencing the differentiation of ES cells into the embryonic germ layers is the transforming growth factor-beta (TGF-beta) growth factor, Nodal. Nodal null mouse mutants lack mesoderm, and injection of Nodal mRNA into nonmammalian embryos induces mesodermal and endodermal tissues. We find that overexpression of Nodal in mouse ES cells leads not only to up-regulation of mesodermal and endodermal cell markers but also to downregulation of neuroectodermal markers. These findings demonstrate the importance of Nodal's influence on the differentiation of pluripotent cells to all three of the primary germ layers. Accordingly, altering expression of factors responsible for cell differentiation in the intact embryo provides an approach for directing ES cell fates in vitro toward therapeutically useful cell types.