Since the discovery of methylcytosine oxidase ten-eleven translocation (TET) proteins, we have witnessed an exponential increase in studies examining their roles in epigenetic regulation. TET family proteins catalyze the sequential oxidation of 5-methylcytosine (5mC) to oxidized methylcytosines including 5-hydroxymethylcytosine (5hmC), 5-formylcytosine, and 5-carboxylcytosine. TETs contribute to the regulation of lineage-specific gene expression via modulating DNA 5mC/5hmC balances at the proximal and distal regulatory elements of cell identity genes, and therefore enhance chromatin accessibility and gene transcription. Emerging evidence suggests that TET dioxygenases participate in the establishment and/or maintenance of hypomethylated bivalent domains at multiple differentiation-associated genes, and thus ensure developmental plasticity. Here, we review the current state of knowledge concerning TET family proteins, DNA hydroxymethylation, their distribution, and function in endoderm, mesoderm, and neuroectoderm specification. We will summarize the evidence pertaining to their crucial regulatory roles in lineage commitment and development.