Wnt signaling pathways control lineage specification in vertebrate embryos and regulate pluripotency in embryonic stem (ES) cells, but how the balance between progenitor self-renewal and differentiation is achieved during axis specification and tissue patterning remains highly controversial. The context- and stage-specific effects of the different Wnt pathways produce complex and sometimes opposite outcomes that help to generate embryonic cell diversity. Although the results of recent studies of the Wnt/β-catenin pathway in ES cells appear to be surprising and controversial, they converge on the same conserved mechanism that leads to the inactivation of TCF3-mediated repression.