SUMMARYTET1 maintains hypomethylation at bivalent promoters through its catalytic activity in embryonic stem cells (ESCs). However, TET1 catalytic activity-independent function in regulating bivalent genes is not well understood. Using a proteomics approach, we map the TET1 interactome in ESCs and identify PSPC1 as a TET1 partner. Genome-wide location analysis reveals that PSPC1 functionally associates with TET1 and Polycomb repressive complex-2 (PRC2). We establish that PSPC1 and TET1 repress, and the lncRNA Neat1 activates, bivalent gene expression. In ESCs, Neat1 is preferentially bound to PSPC1 alongside its PRC2 association at bivalent promoters. During the ESC-to-epiblast-like stem cell (EpiLC) transition, PSPC1 and TET1 maintain PRC2 chromatin occupancy at bivalent gene promoters, while Neat1 facilitates the activation of certain bivalent genes by promoting PRC2 binding to their mRNAs. Our study demonstrates a TET1-PSPC1-Neat1 molecular axis that modulates PRC2-binding affinity to chromatin and bivalent gene transcripts in controlling stem cell bivalency