Embryonic stem cells (ESCs) are pluripotent cell lines that can be maintained indefinitely in an early developmental state. ESC culture conditions almost always require the cytokine LIF to maintain self-renewal. As ESCs are not homogeneous but contain multiple populations reminiscent of the blastocyst, identifying the target cells of LIF is necessary to understand the propagation of pluripotency. We recently found that LIF acts under self-renewing conditions to stimulate the fraction of ESCs that express extraembryonic markers, but has little impact on pluripotent gene expression. Here, we report that LIF has two distinct roles: it blocks early epiblast (Epi) differentiation, and it supports the expansion of primitive endoderm (PrE)-primed ESCs and PrE in vivo. We find that activation of JAK/STAT signalling downstream of LIF occurs initially throughout the pre-implantation embryo, but later marks the PrE. Moreover, the addition of LIF to cultured embryos increases the GATA6(+) PrE population, whereas inhibition of JAK/STAT signalling reduces both NANOG(+) epiblast and GATA6(+) PrE. The reduction of the NANOG(+) Epi might be explained by its precocious differentiation to later Epi derivatives, whereas the increase in PrE is mediated both by an increase in proliferation and inhibition of PrE apoptosis that is normally triggered in embryos with an excess of GATA6(+) cells. Thus, it appears that the relative size of the PrE is determined by the number of LIF-producing cells in the embryo. This suggests a mechanism by which the embryo adjusts the relative ratio of the primary lineages in response to experimental manipulation.