Although expression of liver fatty acid binding protein (L-FABP) modulates cell growth, it is not known if L-FABP also alters cell morphology and differentiation. Therefore, pluripotent embryonic stem cells were transfected with cDNA encoding L-FABP and a series of clones expressing increasing levels of L-FABP were isolated. Untransfected ES cells, as well as ES cells transfected only with empty vector, spontaneously differentiated from rounded adipocyte-like to fibroblast-like morphology, concomitant with marked reduction in expression of stage-specific embryonic antigen (SSEA-1). These changes in morphology and expression of SSEA-1 were greatest in ES cell clones expressing L-FABP above a threshold level. Immunofluorescence confocal microscopy revealed that L-FABP was primarily localized in a diffuse-cytosolic pattern along with a lesser degree of punctate L-FABP expression in the nucleus. Nuclear localization of L-FABP was preferentially increased in clones expressing higher levels of L-FABP. In summary, L-FABP expression altered ES cell morphology and expression of SSEA-1. Taken together with the fact that L-FABP was detected in the nucleus, these data suggested that L-FABP may play a more direct, heretofore unknown, role in regulating ES cell differentiation by acting in the nucleus as well as cytoplasm.