Although the transcriptional regulatory events triggered by Oct-3/4 are well documented, understanding the proteomic networks that mediate the diverse functions of this POU domain homeobox protein remains a major challenge. Here, we present genetic and biochemical studies that suggest an unexpected novel strategy for Oct-3/4-dependent regulation of embryogenesis and cell lineage determination. Our data suggest that Oct-3/4 specifically interacts with nuclear beta-catenin and facilitates its proteasomal degradation, resulting in the maintenance of an undifferentiated, early embryonic phenotype both in Xenopus embryos and embryonic stem (ES) cells. Our data also show that Oct-3/4-mediated control of beta-catenin stability has an important function in regulating ES cell motility. Down-regulation of Oct-3/4 increases beta-catenin protein levels, enhancing Wnt signalling and initiating invasive cellular activity characteristic of epithelial-mesenchymal transition. Our data suggest a novel mode of regulation by which a delicate balance between beta-catenin, Tcf3 and Oct-3/4 regulates maintenance of stem cell identity. Altering the balance between these proteins can direct cell fate decisions and differentiation. The EMBO Journal (2010) 29, 3236-3248. doi:10.1038/emboj.2010.200;Published online 24 August 2010