STAG proteins are key regulators of the cohesin complex and are often linked to alterations in cell identity and disease. Among the mammalian STAG paralogs, STAG3 has been less extensively studied beyond its known roles in meiosis. In this work, we demonstrate that STAG3 is expressed in mouse embryonic stem cells (mESCs) and primordial germ cell-like cells (PGCLCs), where it is required for cell fate decisions. Distinct from the other STAG proteins, STAG3 mediates its effects in the cytoplasm, facilitating the post-transcriptional regulation of gene expression. Furthermore, STAG3 localises to the centrosome independently of cohesin and interacts with proteins involved in mRNA localisation and stability. The knockdown of STAG3 in mESCs using siRNAs results in the destabilisation of the centrosome and the key P-body RNA-induced silencing complex (RISC) component TNRC6C, leading to the derepression of P-body localised mRNAs, such as DPPA3. Our results propose a model in which STAG3 collaborates with RNA-binding proteins (RBPs) and specific target mRNAs to control post-transcriptional gene expression and facilitate the transition from pluripotency in mESCs. Given that STAG3 is upregulated in various cancers, our results provide a novel perspective on how STAG proteins might contribute to cell identity and disease.