A fundamental question in developmental biology is whether there are mechanisms to detect stem cells with mutations that, although not adversely affecting viability, would compromise their ability to contribute to further development. Here, we show that cell competition is a mechanism regulating the fitness of embryonic stem cells (ESCs). We find that ESCs displaying defective bone morphogenetic protein signaling or defective autophagy or that are tetraploid are eliminated at the onset of differentiation by wild-type cells. This elimination occurs in an apoptosis-dependent manner and is mediated by secreted factors. Furthermore, during this process, we find that establishment of differential c-Myc levels is critical and that c-Myc overexpression is sufficient to induce competitive behavior in ESCs. Cell competition is, therefore, a process that allows recognition and elimination of defective cells during the early stages of development and is likely to play important roles in tissue homeostasis and stem cell maintenance.