Naive mouse embryonic stem cells (ESCs) can develop multiple fates, but the cellular and molecular processes that enable lineage competence are poorly characterized. Here, we investigated progression from the ESC ground state in defined culture. We utilized downregulation of Rex1::GFPd2 to track the loss of ESC identity. We found that cells that have newly downregulated this reporter have acquired capacity for germline induction. They can also be efficiently specified for different somatic lineages, responding more rapidly than naive cells to inductive cues. Inhibition of autocrine NODAL signaling did not alter kinetics of exit from the ESC state but compromised both germline and somatic lineage specification. Transient inhibition prior to loss of ESC identity was sufficient for this effect. Genetic ablation of Nodal reduced viability during early differentiation, consistent with defective lineage specification. These results suggest that NODAL promotes acquisition of multi-lineage competence in cells departing naive pluripotency.