The pluripotency of embryonic stem and embryonic carcinoma cells is maintained by the expression of a set of "stemness" genes. Whereas these genes are down-regulated upon induction of differentiation, the germ cell nuclear factor (GCNF) is transiently up-regulated and represses several pluripotency genes. CRIPTO-1, a co-receptor for the morphogen nodal, is strongly expressed in undifferentiated cells and is rapidly down-regulated during retinoic acid-induced differentiation. Although CRIPTO-1 is expressed at very low levels in adult tissues under normal conditions, it is found highly expressed in a broad range of tumors, where it acts as a potent oncogene. We show that expression of CRIPTO-1 is directly repressed by GCNF during differentiation of the human teratocarcinoma cell line, NT2. GCNF bound to a DR0 element of the CRIPTO-1 promoter in vitro, as shown by electrophoretic mobility shift assays, and in vivo, as demonstrated by chromatin immunoprecipitation. Reporter gene assays demonstrated that GCNF-mediated repression of the CRIPTO-1 promoter is dependent upon the DR0 site. Overexpression of GCNF in NT2 cells resulted in repression of CRIPTO-1 transcription, whereas expression of the transcription-activating fusion construct GCNF-VP16 led to an induction of the CRIPTO-1 gene and prevented its retinoic acid-induced down-regulation. Furthermore, we demonstrated that CRIPTO-3, a processed pseudogene of CRIPTO-1 on the X chromosome, is expressed in undifferentiated NT2 cells and is regulated by GCNF in parallel to CRIPTO-1. Thus, our study supports the hypothesis of GCNF playing a central role during differentiation of stem cells by repression of stem cell-specific genes.