Little is known about the gene regulatory networks (GRNs) distinguishing extraembryonic endoderm (ExEn) stem (XEN) cells from those that maintain the extensively characterized embryonic stem cell (ESC). An intriguing network candidate is Sox17, an essential transcription factor for XEN derivation and self-renewal. Here, we show that forced Sox17 expression drives ESCs toward ExEn, generating XEN cells that contribute to ExEn when placed back into early mouse embryos. Transient Sox17 expression is sufficient to drive this fate change during which time cells transit through distinct intermediate states prior to the generation of functional XEN-like cells. To orchestrate this conversion process, Sox17 acts in autoregulatory and feedforward network motifs, regulating dynamic GRNs directing cell fate. Sox17-mediated XEN conversion helps to explain the regulation of cell-fate changes and reveals GRNs regulating lineage decisions in the mouse embryo.