Bone morphogenetic protein 4 (BMP4) and retinoic acid (RA) signaling are the key regulators for germ cell and meiosis induction, respectively. Gonadal tissue also provides an appropriate microenvironment for oocyte differentiation in vivo. The current study aimed to determine whether mimicking in vivo niche is more efficient for oocyte differentiation from embryonic stem (ES) cells. Here, differentiation of mouse ES cells toward oocyte-like cells using embryoid body (EB) and monolayer protocols was induced in the presence (+BMP4) or absence (-BMP4) of BMP4. On day 5, each group was co-cultured with ovarian somatic cells in the presence or absence of RA (+RA or –RA) for an additional 14 days. Our results showed a significant increase in expression of meiotic markers in the +BMP4 condition in EB differentiation protocol. Further differentiation with ovarian somatic cells led to a subpopulation of oocyte-like cell formation. Compared to the controls, the +RA condition resulted in a significant elevation of the meiotic gene expression in contrast to Oct4 that significantly decreased in both protocols. In the cells pre-treated with BMP4 and then exposed to RA in the monolayer differentiation protocol, the gene expression levels of germ cell, Mvh, and maturation markers, Cx37, Zp2, and Gdf9, were also upregulated significantly. Therefore, it can be concluded that +BMP4 and +RA along with ovarian somatic cell co-culture improved the rate of in vitro oocyte differentiation.