AimsThe knowledge of the molecular players that regulate the generation of endoderm cells is imperative to obtain homogenous population of pancreatic β-cells from stem cells. The Ubiquitin proteasome system (UPS) has been envisaged as a crucial intracellular protein degradation system, but its role in the generation of β-cells remains elusive. Hence, it would be appropriate to unravel the potential role of UPS in endoderm specification and utilize the understanding to generate β-cells from pluripotent stem cells. Materials and methodsThe pluripotent stem cells (mESCs, miPSCs and hIPSCs) were subjected to differentiation towards pancreatic β-cells and assessed the proteasomal activity during endodermal differentiation. Pharmacologic agents MG132 and IU-1 were employed to inhibit and activate proteasomal activity respectively at the definitive endoderm stage to investigate its impact on the generation of β-cells. The expression of stage-specific genes were analyzed at transcript and protein levels. We also explored the role of unfolded protein response and UPS-regulated signalling pathways in endodermal differentiation. Key findingsWe observed decreased proteasomal activity specifically during endoderm, but not during the generation of other lineages. Extraneous proteasomal inhibition enhanced the expression of endodermal genes while increasing the proteasomal activity hindered definitive endodermal differentiation. Proteasomal inhibition at the definitive endodermal stage culminated in an enriched generation of insulin-positive cells. Elevated endodermal gene expression was consistent in mESCs and hIPSCs upon proteasomal inhibition. Mechanistic insight revealed the proteasome-inhibited enhanced endodermal differentiation to be via modulating the YAP pathway. SignificanceOur study unravels the specific involvement of UPS in endoderm cell generation from pluripotent stem cells and paves the way for obtaining potential definitive endodermal cells for plausible cellular therapy in the future.