In recent decades, study of the actions of bioactive lipids such as lysophosphatidic acid (LPA) and sphingosine-1-phosphate (S1P) has increased since they are involved in regulating many processes, including self-renewal of embryonic stem cells, embryo development and cancer. Phospholipid phosphatase type 3 (PLPP3) has been shown to be a key player in regulating the balance of these lipids and, in consequence, their signaling. Different lines of evidence suggest that PLPP3 could play a role in endoderm development. To approach this hypothesis, we used mouse embryonic stem cells (ESC) as a model to study Plpp3 function in self-renewal and the transition towards differentiation. We found that lack of PLPP3 mainly affects endoderm formation during differentiation of suspension-formed embryoid bodies. PLPP3-deficient ESC strongly decrease the amount of FOXA2-expressing cells and fail to properly downregulate the expression of pluripotency factors when subjected to an endoderm-directed differentiation protocol. Impaired endoderm differentiation correlated with a transient reduction in nuclear localization of YAP1. These phenotypes were rescued by transiently restoring the expression of catalytically active hPLPP3. In conclusion, PLPP3 plays a role in downregulating pluripotency-associated factors and in endodermal differentiation. PLPP3 regulates proper lipid/YAP1 signaling required for endodermal differentiation.