Significance Embryonic stem cells (ESCs) maintain a low translation rate; therefore control of mRNA translation is critical for preserving their stemness. We identified a hitherto unstudied transcription factor, Yin-yang 2 (YY2), which is translationaly regulated and controls self-renewal and differentiation of mouse ESCs (mESCs). Although YY2 is essential for mESC self-renewal, increased YY2 expression directs differentiation of mESCs toward cardiovascular lineages. Examination of the Yy2 5′-UTR revealed a multilayer regulatory mechanism through which YY2 expression is dictated by the combined actions of the splicing regulator, Polypyrimidine tract-binding protein 1 (PTBP1), and the translation inhibitors, Eukaryotic initiation factor 4E-binding proteins (4E-BPs). YY2 directly controls the expression of several pluripotency and development-related genes. This study describes a synchronized network of alternative splicing and mRNA translation in controlling self-renewal and differentiation.