Embryonic development requires chromatin remodeling for dynamic regulation of gene expression patterns to ensure silencing of pluripotent transcription factors and activation of developmental regulators. Demethylation of H3K27me3 by the histone demethylases Utx and Jmjd3 is important for the activation of lineage choice genes in response to developmental signals. To further understand the function of Utx in pluripotency and differentiation we generated Utx knockout embryonic stem cells (ESCs). Here we show that Utx is not required for the proliferation of ESCs, however, Utx contributes to the establishment of ectoderm and mesoderm in vitro. Interestingly, this contribution is independent of the catalytic activity of Utx. Furthermore, we provide data showing that the Utx homologue, Uty, which is devoid of detectable demethylase activity, and Jmjd3 partly compensate for the loss of Utx. Taken together our results show that Utx is required for proper formation of ectoderm and mesoderm in vitro, and that Utx, similar to its C.elegans homologue, has demethylase dependent and independent functions.