The ability of induced pluripotent stem cells (iPSCs) to differentiate into all adult cell types makes them attractive for research and regenerative medicine; however, it remains unknown when and how this capacity is established. We characterized the acquisition of developmental pluripotency in a suitable reprogramming system to show that iPSCs prior to passaging become capable of generating all tissues upon injection into preimplantation embryos. The developmental potential of nascent iPSCs is comparable to or even surpasses that of established pluripotent cells. Further functional assays and genome-wide molecular analyses suggest that cells acquiring developmental pluripotency exhibit a unique combination of properties that distinguish them from canonical naive and primed pluripotency states. These include reduced clonal self-renewal potential and the elevated expression of differentiation-associated transcriptional regulators. Our observations close a gap in the understanding of induced pluripotency and provide an improved roadmap of cellular reprogramming with ramifications for the use of iPSCs.