The role of the homeobox transcriptional repressor HESX1 in embryonic stem cells (ESCs) remains mostly unknown. Here, we show that Hesx1 is expressed in the preimplantation mouse embryo, where it is required during developmental diapause. Absence of Hesx1 leads to reduced expression of epiblast and primitive endoderm determinants and failure of diapaused embryos to resume embryonic development after implantation. Genetic deletion of Hesx1 impairs self-renewal and promotes differentiation toward epiblast by reducing the expression of pluripotency factors and decreasing the activity of LIF/STAT3 signaling. We reveal that Hesx1-deficient ESCs show elevated ERK pathway activation, resulting in accelerated differentiation toward primitive endoderm, which can be prevented by overexpression of Hesx1. Together, our data provide evidence for a novel role of Hesx1 in the control of self-renewal and maintenance of the undifferentiated state in ESCs and mouse embryos.