Germ cells form the basis for sexual reproduction by producing gametes. In ovaries, primordial germ cells exit the cell cycle and the pluripotency-associated state, differentiate into oogonia, and initiate meiosis. Despite the importance of germ cell differentiation for sexual reproduction, signaling pathways regulating their fate remain largely unknown. Here, we show in mouse embryonic ovaries that germ cell–intrinsic β-catenin activity maintains pluripotency and that its repression is essential to allow differentiation and meiosis entry in a timely manner. Accordingly, in β-catenin loss-of-function and gain-of-function mouse models, the germ cells precociously enter meiosis or remain in the pluripotent state, respectively. We further show that interaction of β-catenin and the pluripotent-associated factor POU5F1 in the nucleus is associated with germ cell pluripotency. The exit of this complex from the nucleus correlates with germ cell differentiation, a process promoted by the up-regulation of Znrf3 , a negative regulator of WNT/β-catenin signaling. Together, these data identify the molecular basis of the transition from primordial germ cells to oogonia and demonstrate that β-catenin is a central gatekeeper in ovarian differentiation and gametogenesis.