Murine preimplantation embryogenesis is characterized by the onset of totipotency, and the gradual restriction of cellular developmental potency. Intriguingly, due to the erasure of repressive epigenetic marks, endogenous retroviruses (ERVs) are transcriptionally active in a manner that depends on the ERV family and developmental stage being considered. It has been accepted that the ERV, MERVL, is associated with the expansion of cell fate as its expression marks totipotent blastomeres in vivo and correlates with the augmented developmental potential observed in MERVL+ embryonic stem cells (ESCs). Additionally, ERVs ORR1A0 and ORR1A1 share a similar expression profile with MERVL, both in vivo and in vitro, establishing a cohort of markers of expanded cell fate. Transcription factor Klf5’s motif is highly enriched in all three of these ERVs. Consistently, overexpression of Klf5 in ESCs expands the scope of their differentiation to include extraembryonic lineages. Remarkably, a single ESC overexpressing Klf5 can contribute to placenta, yolk sac and the embryo proper, whereas control ESCs invariably only contribute to embryonic tissues. Further, Klf5 is required for lineage formation in vivo through its direct regulation of trophectoderm specification genes and its cooperative action with Klf4 during the establishment of the inner cell mass. Beyond simply marking totipotent cells, I describe a role for MERVL’s Gag protein during the one cell to two cell transition. Altogether, this work describes a novel regulator of ERVs that mark totipotency and details the requirement of MERVL-Gag during cellular abscission in murine preimplantation development.