Self-renewal and pluripotency are hallmarks of embryonic stem cells (ESCs). However, the signaling pathways that trigger their transition from self-renewal to differentiation remain elusive. Here, we report that calcineurin-NFAT signaling is both necessary and sufficient to switch ESCs from an undifferentiated state to lineage-specific cells and that the inhibition of this pathway can maintain long-term ESC self-renewal independent of leukemia inhibitory factor. Mechanistically, this pathway converges with the Erk1/2 pathway to regulate Src expression and promote the epithelial-mesenchymal transition (EMT), a process required for lineage specification in response to differentiation stimuli. Furthermore, calcineurin-NFAT signaling is activated when the earliest differentiation event occurs in mouse embryos, and its inhibition disrupts extraembryonic lineage development. Collectively, our results demonstrate that the NFAT and Erk1/2 cascades form a signaling switch for early lineage segregation in mouse ESCs and provide significant insights into the regulation of the balance between ESC self-renewal and early lineage specification.