Undifferentiated mouse embryonic stem cell (mES) proliferation in vitro resembles aspects of in vivo pre-implantation embryonic development. mES were used to assess the embryo-toxicity of cylindrospermopsin (CYN), a water contaminant with an Australian Drinking Water Guideline (ADWG) of 1 μg/L. mES exposed to 0-1 μg/mL CYN for 24-168 h were subjected to an optimised crystal violet viability assay. mES exposed to retinoic acid ± 1 μg/L CYN differentiated into neural-like cells confirmed by morphological examination and RT-PCR for Oct4, Brachyury and Nestin. The CYN No Observed Effect Concentration (OEC) was 0.5 μg/mL, the Lowest OEC was 1 μg/mL (p < 0.001, n = 3), and the IC50 was 0.86 μg/mL after 24 h. The ADWG 1 μg/L CYN did not affect differentiation or proliferation after 72 h, but decreased proliferation after 168 h (p < 0.05). We conclude that higher algal bloom-associated CYN concentrations have the potential to impair in vivo pre-implantation development, and the mES crystal violet assay has broad application to screening environmental toxins.