Pluripotent stem cells (PSCs) deficient for microRNAs (miRNAs), such as Dgcr8−/− or Dicer−/– embryonic stem cells (ESCs), contain no mature miRNA and cannot differentiate into somatic cells. How miRNA deficiency causes differentiation defects remains poorly understood. Here, we report that miR-302 is sufficient to enable neural differentiation of differentiation-incompetent Dgcr8−/− ESCs. Our data showed that miR-302 directly suppresses the tumor suppressor p53, which is modestly upregulated in Dgcr8−/− ESCs and serves as a barrier restricting neural differentiation. We demonstrated that direct inactivation of p53 by SV40 large T antigen, a short hairpin RNA against Trp53, or genetic ablation of Trp53 in Dgcr8−/− PSCs enables neural differentiation, while activation of p53 by the MDM2 inhibitor nutlin-3a in wild-type ESCs inhibits neural differentiation. Together, we demonstrate that a major function of miRNAs in neural differentiation is suppression of p53 and that modest activation of p53 blocks neural differentiation of miRNA-deficient PSCs. In this article, Zhao and colleagues show that expression of miR-302 is sufficient to enable neural differentiation of differentiation-incompetent Dgcr8−/− ESCs. The authors demonstrated that miR-302 directly suppresses p53, which serves as a barrier restricting neural differentiation.