Embryonic stem cells (ESCs) have both the ability to self-renew and to differentiate into various cell lineages. Retinoic acid (RA), a metabolite of Vitamin A, has a critical function in initiating lineage differentiation of ESCs through binding to the retinoic acid receptors. Additionally, the Wnt signaling pathway plays a role in pluripotency and differentiation, depending on the activation status of the canonical and noncanonical pathways. The activation of the canonical Wnt signaling pathway, which requires the nuclear accumulation of β-catenin and its interaction with Tcf1/Lef at Wnt response elements, is involved in ESC stemness maintenance. The noncanonical Wnt signaling pathway, through actions of Tcf3, can antagonize the canonical pathway. We show that RA activates the noncanonical Wnt signaling pathway, while concomitantly inhibiting the canonical pathway. RA increases the expression of ligands and receptors of the noncanonical Wnt pathway (Wnt 5a, 7a, Fzd2 and Fzd6), downstream signaling, and Tcf3 expression. RA reduces the phosphorylated β-catenin levels by fourfold, although total β-catenin levels do not change. We show that RA signaling increases the dissociation of Tcf1 and the association of Tcf3 at promoters of genes that regulate stemness (e.g., NR5A2, Lrh-1) or differentiation (e.g. Cyr61, Zic5). Knockdown of Tcf3 increases Lrh-1 transcript levels in mESCs and prevents the RA-associated, fourfold increase in Zic5, indicating that RA requires Tcf3 to effect changes in Zic5 levels. We demonstrate a novel role for RA in altering the activation of these two Wnt signaling pathways and show that Tcf3 mediates some actions of RA during differentiation.