Germline-competent embryonic stem cells (ESCs) have been derived from mice and rats using culture conditions that include an inhibitor of glycogen synthase kinase 3 (GSK3). However, rat ESCs remain susceptible to sporadic differentiation. Here, we show that unsolicited differentiation is attributable to overinhibition of GSK3. The self-renewal effect of inhibiting GSK3 is mediated via β-catenin, which abrogates the repressive action of TCF3 on core pluripotency genes. In rat ESCs, however, GSK3 inhibition also leads to activation of differentiation-associated genes, notably lineage specification factors Cdx2 and T. Lowered GSK3 inhibition reduces differentiation and enhances clonogenicity and self-renewal. The differential sensitivity of rat ESCs to GSK3 inhibition is linked to elevated expression of the canonical Wnt pathway effector LEF1. These findings reveal that optimal GSK3 inhibition for ESC propagation is influenced by the balance of TCF/LEF factors and can vary between species.