Heterogeneity within pluripotent stem cell (PSC) populations is indicative of dynamic changes that occur when cells drift between different states. Although the role of metastability in PSCs is unclear, it appears to reflect heterogeneity in cell signaling. Using the Fucci cell-cycle indicator system, we show that elevated expression of developmental regulators in G1 is a major determinant of heterogeneity in human embryonic stem cells. Although signaling pathways remain active throughout the cell cycle, their contribution to heterogeneous gene expression is restricted to G1. Surprisingly, we identify dramatic changes in the levels of global 5-hydroxymethylcytosine, an unanticipated source of epigenetic heterogeneity that is tightly linked to cell-cycle progression and the expression of developmental regulators. When we evaluated gene expression in differentiating cells, we found that cell-cycle regulation of developmental regulators was maintained during lineage specification. Cell-cycle regulation of developmentally regulated transcription factors is therefore an inherent feature of the mechanisms underpinning differentiation.