Loss of microRNA (miRNA) pathway components negatively affects differentiation of embryonic stem (ES) cells, but the underlying molecular mechanisms remain poorly defined. Here we characterize changes in mouse ES cells lacking Dicer (Dicer1). Transcriptome analysis of Dicer-/- cells indicates that the ES-specific miR-290 cluster has an important regulatory function in undifferentiated ES cells. Consistently, many of the defects in Dicer-deficient cells can be reversed by transfection with miR-290 family miRNAs. We demonstrate that Oct4 (also known as Pou5f1) silencing in differentiating Dicer-/- ES cells is accompanied by accumulation of repressive histone marks but not by DNA methylation, which prevents the stable repression of Oct4. The methylation defect correlates with downregulation of de novo DNA methyltransferases (Dnmts). The downregulation is mediated by Rbl2 and possibly other transcriptional repressors, potential direct targets of miR-290 cluster miRNAs. The defective DNA methylation can be rescued by ectopic expression of de novo Dnmts or by transfection of the miR-290 cluster miRNAs, indicating that de novo DNA methylation in ES cells is controlled by miRNAs.