Embryonic stem cell (ESC) cultures display a heterogeneous gene expression profile, ranging from a pristine naïve pluripotent state to a primed epiblast state. Addition of inhibitors of GSK3β and MEK (so-called 2i conditions) pushes ESC cultures toward a more homogeneous naïve pluripotent state, but the molecular underpinnings of this naïve transition are not completely understood. Here, we demonstrate that DAZL, an RNA-binding protein known to play a key role in germ-cell development, marks a subpopulation of ESCs that is actively transitioning toward naïve pluripotency. Moreover, DAZL plays an essential role in the active reprogramming of cytosine methylation. We demonstrate that DAZL associates with mRNA of Tet1, a catalyst of 5-hydroxylation of methyl-cytosine, and enhances Tet1 mRNA translation. Overexpression of DAZL in heterogeneous ESC cultures results in elevated TET1 protein levels as well as increased global hydroxymethylation. Conversely, null mutation of Dazl severely stunts 2i-mediated TET1 induction and hydroxymethylation. Our results provide insight into the regulation of the acquisition of naïve pluripotency and demonstrate that DAZL enhances TET1-mediated cytosine hydroxymethylation in ESCs that are actively reprogramming to a pluripotent ground state.