X chromosome inactivation (XCI) is a process required to equalize the dosage of X-encoded genes between female and male cells. XCI is initiated very early during female embryonic development or upon differentiation of female embryonic stem (ES) cells and results in inactivation of one X chromosome in every female somatic cell. The regulation of XCI involves factors that also play a crucial role in ES cell maintenance and differentiation and the XCI process therefore provides a beautiful paradigm to study ES cell biology. In this chapter we describe the important cis and trans acting regulators of XCI and introduce the models that have been postulated to explain initiation of XCI in female cells only. We also discuss the proteins involved in the establishment of the inactive X chromosome and describe the different chromatin modifications associated with the inactivation process. Finally, we describe the potential of mouse and human ES and induced pluripotent stem (iPS) cells as model systems to study the XCI process.