Differentiation of stem cells is driven by tightly coordinated transcriptional programs, yet the contribution of circular RNAs (circRNAs) to lineage specification remains poorly defined. Here, we profiled circRNA and messenger RNA expression during differentiation of human embryonic stem cells into five germ layer-derived lineages. Targeted silencing of dynamically regulated circRNAs revealed that depletion of circACVR2A(2-4), but not its linear counterpart, induced rapid loss of pluripotency accompanied by neuroectoderm-biased differentiation, phenotypically and transcriptionally. Mechanistically, circACVR2A(2-4) interacts with cyclin H within the cyclin-dependent kinase (CDK)-activating kinase (CAK) complex to modulate RNA polymerase II (RNAPII) phosphorylation independently of CDK activation, with lineage commitment consistent with destabilization of RNAPII pausing at poised neuroectodermal loci. In vivo, circACVR2A(2-4) silencing impaired neuronal migration in the embryonic mouse brain and attenuated glioblastoma progression in mouse orthotopic xenografts. Together, these findings identify a circRNA-mediated mechanism that uncouples CAK complex activity to modulate stem cell fate.