Embryonic stem cells (ESCs) can be maitained in culture indefinitely while retaining the ability to make any type of cell in the body, therefore offering a potentially important renewable source for applications in cell replacement therapies. ESCs also provide a powerful tool for addressing some fundamental questions in basic biology. How ESCs retain the ability to produce more of themselves (self-renewal), however, remains largely unknown. STAT3 is a protein that plays an important role in controlling ESC fate. STAT3’s activity in the cell is largely controlled by its two phosphorylation sites: tyrosine 705 and serine 727. In this study, we found that STAT3 phosphorylations at tyrosine 705 and serine 727 play distinct roles in controlling ESC fate. While phosphorylation at tyrosine 705 is essential for mouse ESC self-renewal mediated by STAT3, phosphorylation at serine 727 is dispensable, serving only to promote ESC proliferation. We also found that phosphorylation of STAT3 at serine 727 is important for efficient neural differentation of ESCs. Our findings will help us to better control ESC fate, a step that is critical if the full potential of ESCs in both research and clinical application is to be realized.