SUMMARYThe ER resident proteins VMP1 and TMEM41b share a DedA domain, which confers lipid scramblase activity. Loss of either gene results in embryonic lethality in mice and defects in autophagy and lipid droplet metabolism. To understand their role in pluripotency and specification, we generated Vmp1 and Tmem41b mutant mouse embryonic stem cells (ESCs). We observe that ESCs carrying mutations in Vmp1 and Tmem41b are viable, proliferate normally, and maintain a largely intact pluripotency-associated transcriptional profile. Despite clear defects in the accumulation of LC3-positive autophagosomes and lipid droplets, ESCs carrying combined mutations in Vmp1 and Tmem41b can differentiate into a wide range of embryonic cell types. However, the combined loss of Vmp1 and Tmem41b impairs the specification of primitive endoderm-like cells. We observe a delayed differentiation of mutant ESCs into extra-embryonic endoderm stem (XEN) cells. Mechanistically, we discover that mutant cells upregulate DDIT3, a WNT inhibitor. Chemical stimulation of the WNT cascade can rescue the differentiation delay. Our findings reveal a redundant function of the lipid scramblases VMP1 and TMEM41b and identify a specific role in signaling during extra-embryonic endoderm development.