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Cell fate transitions depend on balanced rewiring of transcription and translation programs to mediate ordered developmental progression. Components of the nonsense-mediated mRNA decay (NMD) pathway have been implicated in regulating embryonic stem cell (ESC) differentiation, but the exact mechanism is unclear. Here we show that NMD controls expression levels of the translation initiation factor  Eif4a2  and its premature termination codon-encoding isoform ( Eif4a2   PTC  ). NMD deficiency leads to translation of the truncated eIF4A2 PTC  protein. eIF4A2 PTC  elicits increased mTORC1 activity and translation rates and causes differentiation delays. This establishes a previously unknown feedback loop between NMD and translation initiation. Furthermore, our results show a clear hierarchy in the severity of target deregulation and differentiation phenotypes between NMD effector KOs ( Smg5  KO &gt;  Smg6  KO &gt;  Smg7  KO), which highlights heterodimer-independent functions for SMG5 and SMG7. Together, our findings expose an intricate link between mRNA homeostasis and mTORC1 activity that must be maintained for normal dynamics of cell state transitions.

NMD is required for timely cell fate transitions by fine-tuning gene expression and regulating translation