The binding sequence for any transcription factor can be found millions of times within a genome, yet only a small fraction of these sequences encode functional transcription factor binding sites. One of the reasons for this dichotomy is that many other factors, such as nucleosomes, compete for binding. To study how the competition between nucleosomes and transcription factors helps determine a functional transcription factor site from a predicted transcription factor site, we compared experimentally-generated in vitro nucleosome occupancy with in vivo nucleosome occupancy and transcription factor binding in murine embryonic stem cells. Using a solution hybridization enrichment technique, we generated a high-resolution nucleosome map from targeted regions of the genome containing predicted sites and functional sites of Oct4/Sox2 regulation. We found that at Pax6 and Nes, which are bivalently poised in stem cells, functional Oct4 and Sox2 sites show high amounts of in vivo nucleosome displacement compared to in vitro. Oct4 and Sox2, which are active, show no significant displacement of in vivo nucleosomes at functional sites, similar to nonfunctional Oct4/Sox2 binding. This study highlights a complex interplay between Oct4 and Sox2 transcription factors and nucleosomes among different target genes, which may result in distinct patterns of stem cell gene regulation.