Regulation of RNA cap formation has potent impacts on gene regulation, controlling which transcripts are expressed, processed and translated into protein. Recently, the RNA cap methyltransferases RNA guanine-7 methyltransferase (RNMT) and cap-specific mRNA (nucleoside-2'-O-)-methyltransferase 1 (CMTR1) have been found to be independently regulated during embryonic stem (ES) cell differentiation controlling the expression of overlapping and distinct protein families. During neural differentiation, RNMT is repressed and CMTR1 is up-regulated. RNMT promotes expression of the pluripotency-associated gene products; repression of the RNMT complex (RNMT–RAM) is required for repression of these RNAs and proteins during differentiation. The predominant RNA targets of CMTR1 encode the histones and ribosomal proteins (RPs). CMTR1 up-regulation is required to maintain the expression of histones and RPs during differentiation and to maintain DNA replication, RNA translation and cell proliferation. Thus the co-ordinate regulation of RNMT and CMTR1 is required for different aspects of ES cell differentiation. In this review, we discuss the mechanisms by which RNMT and CMTR1 are independently regulated during ES cell differentiation and explore how this influences the co-ordinated gene regulation required of emerging cell lineages.