Embryonic stem (ES) cells are pluripotent stem cells that give rise to all tissue types in a mature organism. Transcription factors control the expression of genes that maintain ES cell pluripotency or induce ES cell differentiation into progenitors of all three germ layers (endoderm, mesoderm, and ectoderm) during vertebrate embryogenesis. A subset of pluripotency transcription factors, including Oct-3/4, KLF4, SOX2, and c-Myc, is also sufficient to reprogram a somatic cell back to a pluripotent state, thereby generating an induced pluripotent stem (iPS) cell. Other transcription factors, such as SOX17, Brachyury, and Pax6, are capable of driving the differentiation of pluripotent stem cells into endoderm, mesoderm, and ectoderm, respectively. A better understanding of the transcription factors that regulate ES cell differentiation may inform the generation of clinically relevant cell types from iPS cells. Differentiated iPS cells can then be used in drug screening experiments and to elucidate disease etiology.