The mammalian blastocyst consists of three distinct cell types: epiblast, trophoblast (TB), and primitive endoderm (PrE). Although embryonic stem cells (ESCs) and trophoblast stem cells (TSCs) retain the functional properties of epiblast and TB, respectively, stem cells that fully recapitulate the developmental potential of PrE have not been established. Here, we report derivation of primitive endoderm stem cells (PrESCs) in mice. PrESCs recapitulate properties of embryonic day 4.5 founder PrE, are efficiently incorporated into PrE upon blastocyst injection, generate functionally competent PrE-derived tissues, and support fetal development of PrE-depleted blastocysts in chimeras. Furthermore, PrESCs can establish interactions with ESCs and TSCs and generate descendants with yolk sac-like structures in utero. Establishment of PrESCs will enable the elucidation of the mechanisms for PrE specification and subsequent pre- and postimplantation development.