While the pluripotency of stem cells is known to determine the fate of embryonic development, the mechanisms underlying the acquisition and maintenance of full pluripotency largely remain elusive. Here, we show that the balance between mitochondrial fission and fusion is critical for the full pluripotency of stem cells. By analyzing induced pluripotent stem cells with differential developmental potential, we found that excess mitochondrial fission is associated with an impaired embryonic developmental potential. We further uncover that the disruption of mitochondrial dynamics impairs the differentiation and embryonic development of pluripotent stem cells; most notably, pluripotent stem cells that display excess mitochondrial fission fail to produce live-born offspring by tetraploid complementation. Mechanistically, excess mitochondrial fission increases cytosolic Ca entry and CaMKII activity, leading to ubiquitin-mediated proteasomal degradation of β-Catenin protein. Our results reveal a previously unappreciated fundamental role for mitochondrial dynamics in determining the full pluripotency and embryonic developmental potential of pluripotent stem cells.