Pluripotent embryonic stem cells (ESCs) self-renew or differentiate into all tissues of the developing embryo and cell-specification factors are necessary to balance gene expression. Here we delineate the function of the PHD-finger protein 5a (Phf5a) in ESC self-renewal and ascribe its role in regulating pluripotency, cellular reprogramming and myoblast specification. We demonstrate that Phf5a is essential for maintaining pluripotency, since depleted ESCs exhibit hallmarks of differentiation. Mechanistically, we attribute Phf5a function to the stabilization of the Paf1 transcriptional complex and control of RNA polymerase II elongation on pluripotency loci. Apart from an ESC-specific factor, we demonstrate that Phf5a controls differentiation of adult myoblasts. Our findings suggest a potent mode of regulation by Phf5a in stem cells, which directs their transcriptional programme, ultimately regulating maintenance of pluripotency and cellular reprogramming.