Epigenetic mechanisms, such as histone modifications and DNA methylation, have been shown to play a key role in the regulation of gene transcription. Results of recent studies indicate that a novel “bivalent” chromatin structure marks key developmental genes in embryonic stem cells (ESCs), wherein a number of untranscribed lineage-control genes, such as Sox1, Nkx2-2, Msx1, Irx3, and Pax3, are epigenetically modified with a unique combination of activating and repressive histone modifications that prime them for potential activation (or repression) upon cell lineage induction and differentiation. However, results of these studies also showed that a subset of lineage-control genes, such as Myf5 and Mash1, were not marked by these histone modifications, suggesting that distinct epigenetic mechanisms might exist for lineage-control genes in ESCs. In this review article, we summarize evidence regarding possible mechanisms that control these unique histone modifications at lineage-control gene loci in ESCs and consider their possible contribution to ESC pluripotency. In addition, we propose a novel “histone modification pulsing” model wherein individual pluripotent stem cells within the inner cell mass of blastocysts undergo transient asynchronous histone modifications at these developmental gene loci, thereby conferring differential responsiveness to environmental cues and morphogenic gradients important for cell lineage determination. Finally, we consider how these rapid histone modification exchanges become progressively more stable as ESCs undergo differentiation and maturation into specialized cell lineages.