Cell cycle and differentiation decisions are tightly linked; however, the underlying principles that drive these decisions are not fully understood. Here, we combined cell-cycle reporter system and single-cell RNA-seq profiling to study the transcriptomes of mouse embryonic stem cells (ESCs) in the context of cell cycle states and differentiation. By applying a retinoic acid-based protocol as a differentiation assay representing exit from pluripotency, we show that Esrrb, a key pluripotent factor is upregulated during G2/M phase and promptly downregulated during exit from pluripotency. Enhancer chromatin states and Esrrb ChIP-seq map expose Esrrb's association with differentiation genes, were in the context of retinoic acid, enhancers associated with differentiation program driving extraembryonic endoderm cells (XENs). We show that only G2/M ESCs were capable of differentiating into XENs, whereas cells in the G1 phase predominantly produce epiblast stem cells (EpiSCs). Furthermore, Cells engineered to overexpress Esrrb allowed G1 ESCs to produce XENs, while Esrrb knockout ESCs completely lost their potential to differentiate into XEN. Interestingly, this phenomenon is unique to the pluripotency state as sorting cells after initiation of differentiation resulted in a cell cycle-independent differentiation decisions. Cells in both G1 and G2/M phases contributed equally to EpiSC and XEN cellular lineages. Taken together, this study reveals an important functional link between Esrrb and cell-cycle states during exit from pluripotency. Our novel approach of applying single cell RNAseq in a cell cycle dependent manner can be further expand into other differentiation assays and expand our understanding of early differentiation events.