Embryonic stem (ES) cells are pluripotent cells with self-renewing property. Nanog is a homeobox transcription factor required to maintain ES cells in a non-differentiated state. Using affinity purification coupled to liquid chromatography-tandem mass spectrometry analysis, we identified Sall4 as a Nanog co-purified protein. Co-immunoprecipitation and glutathione S-transferase pulldown experiments confirmed the interaction between Nanog and Sall4. We showed that Nanog and Sall4 co-occupied Nanog and Sall4 enhancer regions in living ES cells. Knockdown of Nanog or Sall4 by RNA interference led to a reduction in Nanog and Sall4 enhancer activities, providing evidence that these factors are positively regulating these enhancers. Importantly, co-transfection of Sall4 with these ES cell-specific enhancers led to transactivation in heterologous somatic cells. Chromatin immunoprecipitation experiments also showed that Sall4 co-occupied many Nanog binding sites in ES cells. Our data implicate Sall4 as an important component of the transcription regulatory networks in ES cells by cooperating with Nanog. We suggest that Sall4 and Nanog form a regulatory circuit similar to that of Oct4 and Sox2. This study highlights the extensive regulatory loops connecting genes, which encode for key transcription factors in ES cells.