Embryonic stem cells (ESCs) are self-renewing and pluripotent. In recent years, factors that control pluripotency, mostly nuclear, have been identified. To identify non-nuclear regulators of ESCs, we screened an endogenously labeled fluorescent fusion-protein library in mouse ESCs. One of the more compelling hits was the cell-cycle-associated protein 1 (CAPRIN1). CAPRIN1 knockout had little effect in ESCs, but it significantly altered differentiation and gene expression programs. Using RIP-seq and SLAM-seq, we found that CAPRIN1 associates with, and promotes the degradation of, thousands of RNA transcripts. CAPRIN1 interactome identified XRN2 as the likely ribonuclease. Upon early ESC differentiation, XRN2 is located in the nucleus and colocalizes with CAPRIN1 in small RNA granules in a CAPRIN1-dependent manner. We propose that CAPRIN1 regulates an RNA degradation pathway operating during early ESC differentiation, thus eliminating undesired spuriously transcribed transcripts in ESCs. [Display omitted] • CAPRIN1 is highly expressed in murine ESCs and is required for ESC differentiation • CAPRIN1 is involved in RNA degradation in ESCs • CAPRIN1 acts through the exoribonuclease XRN2 • CAPRIN1 is required for the cytoplasmic translocation of XRN2 from the nucleus Viegas et al. explore the role of cell-cycle-associated protein 1 (CAPRIN1) in early murine-differentiated ESCs, and they show that CAPRIN1 promotes the degradation of thousands of RNA transcripts and that it interacts with exoribonuclease XRN2. The authors define a mechanism whereby CAPRIN1 (via XRN2) causes RNA degradation to eliminate undesired RNA transcripts during differentiation. [ABSTRACT FROM AUTHOR]