Nuclear architecture has never been carefully examined during early mammalian development at the stages leading to establishment of the embryonic and extra-embryonic lineages. Heterogeneous activity of the methyltransferase CARM1 during these stages results in differential methylation of histone H3R26 to modulate establishment of these two lineages. Here we show that CARM1 accumulates in nuclear granules at the 2- to 4-cell stage transition in the mouse embryo, with the majority corresponding to paraspeckles. The paraspeckle component Neat1 and its partner p54nrb are required for CARM1's association with paraspeckles and for H3R26 methylation. Conversely, CARM1 also influences paraspeckle organization. Depletion of Neat1 or p54nrb results in arrest at the 16- to 32-cell stage, with elevated expression of transcription factor Cdx2, promoting differentiation into the extra-embryonic lineage. This developmental arrest occurs at an earlier stage than following CARM1 depletion, indicating that paraspeckles act upstream of CARM1 but also have additional earlier roles in fate choice.