Unraveling the mechanisms underlying early neural differentiation of embryonic stem cells (ESCs) is crucial to developing cell-based therapies of neurodegenerative diseases. Neural fate acquisition is proposed to be controlled by a 'default' mechanism, for which the molecular regulation is not well understood. In this study, we investigated the functional roles of Mediator Med23 in pluripotency and lineage commitment of murine ESCs. Unexpectedly, we found that, despite the largely unchanged pluripotency and self-renewal of ESCs, Med23 depletion rendered the cells prone to neural differentiation in different differentiation assays. Knockdown of two other Mediator subunits, Med1 and Med15, did not alter the neural differentiation of ESCs. Med15 knockdown selectively inhibited endoderm differentiation, suggesting the specificity of cell fate control by distinctive Mediator subunits. Gene profiling revealed that Med23 depletion attenuated BMP signaling in ESCs. Mechanistically, MED23 modulated Bmp4 expression by controlling the activity of ETS1, which is involved in Bmp4 promoter-enhancer communication. Interestingly, med23 knockdown in zebrafish embryos also enhanced neural development at early embryogenesis, which could be reversed by co-injection of bmp4 mRNA. Taken together, our study reveals an intrinsic, restrictive role of MED23 in early neural development, thus providing new molecular insights for neural fate determination.