Pluripotent embryonic stem cells have a unique and characteristic epigenetic profile, which is critical for differentiation to all embryonic germ lineages. When stem cells exit the pluripotent state and commit to lineage-specific identities during the process of gastrulation in early embryogenesis, extensive epigenetic remodelling mediates both the switch in cellular programme and the loss of potential to adopt alternative lineage programmes. However, it remains to be understood how the stem cell epigenetic profile encodes pluripotency, or how dynamic epigenetic regulation helps to direct cell fate specification. Recent advances in stem cell culture techniques, cellular reprogramming, and single-cell technologies that can quantitatively profile epigenetic marks have led to significant insights into these questions, which are important for understanding both embryonic development and cell fate engineering. This review provides an overview of key concepts and highlights exciting new advances in the field.