Since it was found that p53 is highly expressed in murine embryonic stem cells, it remained a mystery whether p53 is active in this cell type. We show that a significant part of p53 is localised in the nucleus of murine embryonic stem cells and that the majority of this nuclear p53 is bound to DNA. According to its nuclear localisation, we show that p53 alters the transcriptional program of stem cells. Nevertheless, the anti-proliferative activity of p53 is compromised in stem cells, and this control is due, at least in part, to the high amount of MdmX that is present in embryonic stem cells and bound to p53. Instead of the anti-proliferative activity that p53 has in differentiated cells, p53 controls transcription of pro-proliferative genes in embryonic stem cells including c-myc and c-jun. The impeded anti-proliferative activity of p53 and the induction of certain proto-oncogenes by p53 in murine embryonic stem cells can explain why stem cells proliferate efficiently despite having high levels of p53.