Besides holding great promise in clinics, embryonic stem (ES) cells represent a valuable tool for studying regulation of early developmental processes, such as cell differentiation in preimplantation embryos. The caudal-related homeobox protein Cdx2 is a transcriptional regulator essential for trophoblast lineage, functioning as early as implantation. Using an inducible system, we show that gain of Cdx2 function in ES cells triggers trophoblast-like morphological differentiation, accompanied by ploidy increase, onset of expression of trophoblast-specific markers, and loss of pluripotency-associated gene expression. These data provide an insight into the genetic network that controls lineage specification and functioning in early mammalian development.