The embryonic stem cell test (EST) has been designed to predict developmental toxicity based upon compound-induced inhibition of embryonic stem cell (ESC) differentiation. The end point scoring, the test duration, and the definition of the predictivity and the applicability domain require improvements to facilitate implementation of the EST into regulatory testing strategies. The use of transcriptomics to study compound-induced differentiation modulation may improve the EST in each of these aspects. ESC differentiation was induced, and cell samples were collected after 0, 24, and 48 h of differentiation. Additionally, samples were collected that were 24 h exposed to one of five developmentally toxic compounds or a nondevelopmentally toxic compound. All samples were hybridized to Affymetrix GeneChips, and analyses revealed that 26 genes were significantly regulated both during ESC differentiation and by exposure to each of the developmentally toxic compounds tested. Using principal component analysis, we defined a "differentiation track" on the basis of this gene list, which represents ESC differentiation. We showed that significant deviation from the differentiation track was in line with the developmental toxic properties of the compounds. The significance of deviation was analyzed using the leave-one-out cross-validation, which showed a favorable prediction of toxicity in the system. Our findings show that gene expression signatures can be used to identify developmental toxicant-induced differentiation modulation. In addition, studying compound-induced effects at an early stage of differentiation combined with transcriptomics leads to increased objectivity in determining differentiation inhibition and to a reduction of the test duration. Furthermore, this approach may improve the predictivity and applicability domain of the EST.