The second cell fate decision in the early stage of mammalian embryonic development is pivotal; however, the underlying molecular mechanism is largely unexplored. Here, we report that Prmt1 acts as an important regulator in primitive endoderm (PrE) formation. First, Prmt1 depletion promotes PrE gene expression in mouse embryonic stem cells (ESCs). Single-cell RNA sequencing and flow cytometry assays demonstrated that Prmt1 depletion in mESCs contributes to an emerging cluster, where PrE genes are upregulated significantly. Furthermore, the efficiency of extraembryonic endoderm stem cell induction increased in Prmt1-depleted ESCs. Second, the pluripotency factor Klf4 methylated at Arg396 by Prmt1 is required for recruitment of the repressive mSin3a/HDAC complex to silence PrE genes. Most importantly, an embryonic chimeric assay showed that Prmt1 inhibition and mutated Klf4 at Arg 396 induce the integration of mouse ESCs into the PrE lineage. Therefore, we reveal a regulatory mechanism for cell fate decisions centered on Prmt1-mediated Klf4 methylation.