The rarity and inaccessibility of the earliest primordial germ cells (PGCs) in the mouse embryo thwart efforts to investigate molecular mechanisms of germ-cell specification. stella (also called Dppa3) marks the rare founder population of the germ lineage. Here we differentiate mouse embryonic stem cells carrying a stella transgenic reporter into putative PGCs in vitro. The Stella(+) cells possess a transcriptional profile similar to embryo-derived PGCs, and like their counterparts in vivo, lose imprints in a time-dependent manner. Using inhibitory RNAs to screen candidate genes for effects on the development of Stella(+) cells in vitro, we discovered that Lin28, a negative regulator of let-7 microRNA processing, is essential for proper PGC development. Furthermore, we show that Blimp1 (also called Prdm1), a let-7 target and a master regulator of PGC specification, can rescue the effect of Lin28 deficiency during PGC development, thereby establishing a mechanism of action for Lin28 during PGC specification. Overexpression of Lin28 promotes formation of Stella(+) cells in vitro and PGCs in chimaeric embryos, and is associated with human germ-cell tumours. The differentiation of putative PGCs from embryonic stem cells in vitro recapitulates the early stages of gamete development in vivo, and provides an accessible system for discovering novel genes involved in germ-cell development and malignancy.