Complex interactions between genes or proteins contribute substantially to phenotypic evolution. We present a probabilistic model and a maximum likelihood approach for cross-species clustering analysis and for identification of conserved as well as species-specific co-expression modules. This model enables a "soft" cross-species clustering (SCSC) approach by encouraging but not enforcing orthologous genes to be grouped into the same cluster. SCSC is therefore robust to obscure orthologous relationships and can reflect different functional roles of orthologous genes in different species. We generated a time-course gene expression dataset for differentiating mouse embryonic stem (ES) cells, and compiled a dataset of published gene expression data on differentiating human ES cells. Applying SCSC to analyze these datasets, we identified conserved and species-specific gene regulatory modules. Together with protein-DNA binding data, an SCSC cluster specifically induced in murine ES cells indicated that the KLF2/4/5 transcription factors, although critical to maintaining the pluripotent phenotype in mouse ES cells, were decoupled from the OCT4/SOX2/NANOG regulatory module in human ES cells. Two of the target genes of murine KLF2/4/5, LIN28 and NODAL, were rewired to be targets of OCT4/SOX2/NANOG in human ES cells. Moreover, by mapping SCSC clusters onto KEGG signaling pathways, we identified the signal transduction components that were induced in pluripotent ES cells in either a conserved or a species-specific manner. These results suggest that the pluripotent cell identity can be established and maintained through more than one gene regulatory network.