RNAa (RNA activation) is a mechanism by which small dsRNA (double-stranded RNA), termed saRNA (small activating RNA), target promoter sequences to induce gene expression. This technique represents a novel approach to gene overexpression without the use of exogenous DNA. In the present study, we investigated whether RNAa can modulate expression of the development-related gene NANOG and manipulate cell fate. Using a lentivirus-based reporter system as a screening tool, we identified synthetic saRNAs that stimulate NANOG expression in human NCCIT embryonic carcinoma cells. Mismatch mutations to saRNA duplexes define sequence requirement for gene activation. Functional analysis of NANOG induction reveals saRNA treatment predictably modulates the expression of several known downstream target genes, including FOXH1 (forkhead box H1), REST (RE1-silencing transcription factor), OCT4 (octamer-binding protein 4) and REX1 (reduced expression protein 1). Treatment with RA (retinoic acid) triggers NCCIT cell differentiation, reducing NANOG and OCT4 expression and up-regulating several neural markers [i.e. ASCL1 (achaete-scute complex homologue 1), NEUROD1 (neuronal differentiation 1) and PAX6 (paired box 6)]. However, co-treatment with saRNA antagonizes NANOG down-regulation and RA-induced differentiation. Ectopic overexpression of NANOG via lentiviral transduction further recapitulates saRNA results, providing proof-of-concept that RNAa may be utilized to activate development-related genes and manipulate cell fate.