Mouse embryonic stem cells (ESCs) have played a crucial role in biomedical research where they can be used to elucidate gene function through the generation of genetically modified mice. A critical requirement for the success of this technology is the ability of ESCs to contribute to viable chimaeras with germ-line transmission of the genetically modified allele. We have identified several ESC clones that cause embryonic death of chimaeras at mid to late gestation stages. These clones had a normal karyotype, were pathogen free and their in vitro differentiation potential was not compromised. Chimaeric embryos developed normally up to E13.5 but showed a significant decrease in embryo survival by E17.5 with frequent haemorrhaging. We investigated the relationship between the ESCs transcriptional and epigenomic state and their ability to contribute to viable chimaeras. RNA sequencing identified four genes (Gtl2, Rian, Mirg and Rtl1as) located in the Dlk1-Dio3 imprinted locus that were expressed at lower levels in the compromised ESC clones and this was confirmed by qRT-PCR. Bisulphite sequencing analysis showed significant hypermethylation at the Dlk1-Dio3 imprinted locus with no consistent differences in methylation patterns at other imprinted loci. Treatment of the compromised ESCs with 5-azacytidine reactivated stable expression of Gtl2 and rescued the lethal phenotype but only gave low level chimaeras.