The ability of stem cells to activate different gene expression programs requires the choreographed assembly of trans-acting factors at enhancers and promoters during cell differentiation. In this study, we show that the proteasome acts on specific regulatory regions in embryonic stem (ES) cells to prevent incorrect transcriptional initiation. Chemical or siRNA-mediated inhibition of proteasome activity results in increased transcription factor and RNA polymerase II binding and leads to activation of cryptic promoters. Analysis of the binding profiles of different proteasome subunits in normal ES cells and following RNAi knockdown of individual subunits provides evidence for a targeted assembly of the 26S proteasome at specific regulatory elements. Our results suggest that the proteasome promotes a dynamic turnover of transcription factor and Pol II binding at tissue-specific gene domains in ES cells, thereby restricting permissive transcriptional activity and keeping the genes in a potentiated state, ready for activation at later stages.