mESCs and epiblast are considered to follow strict lineage adherence and lack the potential to contribute to trophoectoderm. Here, we report the derivation of trophoblast stem cells (ESTS) from the mESCs. The single-cell transcriptome and molecular characterization of ESTS show similarity with TSCs. They efficiently integrate into the TE compartment of the blastocyst and contribute to the placenta during development. We discovered GSK3 beta as a critical regulator of the TE fate of ESCs. It plays a vital stage-specific role during ESTS derivation. We further show beta-CATENIN and an intron-I regulatory element of Cdx2 are essential for the TE fate of ESCs. We further show that the mouse epiblast can readily differentiate into TE lineage. In contrast to the paradigm of the restricted potential of pluripotent ESCs and epiblast, our data shows that murine ESCs and epiblast have the unrestrained developmental potential for extraembryonic lineages.