Tet-mediated DNA oxidation is a recently identified mammalian epigenetic modification, and its functional role in cell-fate transitions remains poorly understood. Here, we derive mouse embryonic fibroblasts (MEFs) deleted in all three Tet genes and examine their capacity for reprogramming into induced pluripotent stem cells (iPSCs). We show that Tet-deficient MEFs cannot be reprogrammed because of a block in the mesenchymal-to-epithelial transition (MET) step. Reprogramming of MEFs deficient in TDG is similarly impaired. The block in reprogramming is caused at least in part by defective activation of key miRNAs, which depends on oxidative demethylation promoted by Tet and TDG. Reintroduction of either the affected miRNAs or catalytically active Tet and TDG restores reprogramming in the knockout MEFs. Thus, oxidative demethylation to promote gene activation appears to be functionally required for reprogramming of fibroblasts to pluripotency. These findings provide mechanistic insight into the role of epigenetic barriers in cell-lineage conversion.