The transcriptional mechanisms underlying lineage specification and differentiation of embryonic stem (ES) cells remain elusive. Oct-3/4 (POU5f1) is one of the earliest transcription factors expressed in the embryo. Both the pluripotency and the fate of ES cells depend upon a tight control of Oct-3/4 expression. We report that transgene- or TGFbeta-induced increase in Oct-3/4 mRNA and protein levels in undifferentiated ES cells and at early stages of differentiation triggers expression of mesodermal and cardiac specific genes through Smad2/4. cDNA antisense- and siRNA-mediated inhibition of upregulation of Oct-3/4 in ES cells prevent their specification toward the mesoderm and their differentiation into cardiomyocytes. Similarly, Oct-3/4 siRNA injected in the inner cell mass of blastocysts impairs cardiogenesis in early embryos. Thus, quantitative Oct-3/4 expression is regulated by a morphogen, pointing to a pivotal and physiological function of the POU factor in mesodermal and cardiac commitments of ES cells and of the epiblast.