Early plant embryo patterning determines the position of organs and defines the precursors of tissue types. One of the earliest patterning events is the specification of precursors for the root and shoot stem cell niches. In the shoot meristem, expression of the stem cell regulator WUSCHEL (WUS) commences at the 16-cell embryo. However, initiation of the stem cell program requires the activity of the WUSCHEL HOMEOBOX 2 (WOX2) transcription factor, whereas WUS is required for its maintenance thereafter. The reason for the capacity of WOX2 to initiate the stem cell program is unknown. Here we study the molecular mechanism of WOX2 function by identifying direct protein interactors by IP-MS. We demonstrate that WOX2 function requires interaction with the groucho-type co-repressor TOPLESS, indicating that it acts as epigenetic transcriptional repressor. We also identified the ubiquitin-selective chaperone CDC48 as a bona fide interactor of WOX2. We show that CDC48A loss-of-function results in similar embryo defects as observed in wox2 mutants and suppresses the effects of WOX2 overexpression. During embryogenesis, WOX2 and CDC48A proteins co-localized in the nucleus and WOX2 nuclear accumulation depends on CDC48A activity. We will discuss how CDC48 functions in transcriptional regulation of stem cell formation.