Clinical applications of human induced pluripotent stem cells (hiPSCs) are expected, but hiPSC lines vary in their differentiation propensity. For efficient selection of hiPSC lines suitable for differentiation into desired cell lineages, here we identify SALL3 as a marker to predict differentiation propensity. SALL3 expression in hiPSCs correlates positively with ectoderm differentiation capacity and negatively with mesoderm/endoderm differentiation capacity. Without affecting self-renewal of hiPSCs, SALL3 knockdown inhibits ectoderm differentiation and conversely enhances mesodermal/endodermal differentiation. Similarly, loss- and gain-of-function studies reveal that SALL3 inversely regulates the differentiation of hiPSCs into cardiomyocytes and neural cells. Mechanistically, SALL3 modulates DNMT3B function and DNA methyltransferase activity, and influences gene body methylation of Wnt signaling-related genes in hiPSCs. These findings suggest that SALL3 switches the differentiation propensity of hiPSCs toward distinct cell lineages by changing the epigenetic profile and serves as a marker for evaluating the hiPSC differentiation propensity.