Cultured human embryonic stem cells (hESCs) can develop genetic anomalies that increase their susceptibility to transformation. In this study, we characterized a variant hESC (vhESC) line and investigated the molecular mechanisms leading to the drift towards a transformed state. Our findings revealed that vhESCs up-regulate EMT-specific markers, accelerate wound healing, exhibit compromised lineage differentiation, and retain pluripotency gene expression in teratomas. Furthermore, we discovered an altered epigenomic landscape and overexpression of the lysine methyltransferases EHMT1, EHMT2, and NSD group of proteins in vhESCs. Remarkably, depleting NSD3 oncogene reversed the molecular and phenotypic changes in vhESCs. We identified a detailed mechanism where EHMT2 interacts and methylates NSD3 at lysine 477, stabilizing its protein levels in vhESCs. In addition, we showed that NSD3 levels are regulated by protein degradation in hESCs, and its stabilization leads to the emergence of the variant state. Overall, our study identify that misregulation of NSD3 in pluripotent stem cells, through methylation-mediated abrogation of its protein degradation, drives hESCs towards oncogenic transformation.