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Complex cross‐talk between endoderm and the microenvironment is an absolute requirement to orchestrate hepatic specification and expansion. In the mouse, the septum transversum and cardiac mesoderm, through secreted bone morphogenetic proteins (BMP) and fibroblast growth factors (FGF), respectively, instruct the adjacent ventral endoderm to become hepatic endoderm. Consecutively, endothelial cells promote expansion of the specified hepatic endoderm. By using a mouse reporter embryonic stem cell line, in which hCD4 and hCD25 were targeted to the Foxa2 and Foxa3 loci, we reconstituted an in vitro culture system in which committed endoderm cells coexpressing hCD4‐Foxa2 and hCD25‐Foxa3 were isolated and cocultured with endothelial cells in the presence of BMP4 and bFGF. In this culture setting, we provide mechanistic evidence that endothelial cells function not only to promote hepatic endoderm expansion but are also required at an earlier step for hepatic specification, at least in part through regulation of the Wnt and Notch pathways. Activation of Wnt and Notch by chemical or genetic approaches increases endoderm cell numbers but inhibits hepatic specification, and conversely, chemical inhibition of both pathways enhances hepatic specification and reduces proliferation. By using identical coculture conditions, we defined a similar dependence of endoderm harvested from embryos on endothelial cells to support their growth and hepatic specification. Our findings (1) confirm a conserved role of Wnt repression for mouse hepatic specification, (2) uncover a novel role for Notch repression in the hepatic fate decision, and (3) demonstrate that repression of Wnt and Notch signaling in hepatic endoderm is controlled by the endothelial cell niche. S TEM  C ELLS  2011;29:217–228

An Endothelial Cell Niche Induces Hepatic Specification Through Dual Repression of Wnt and Notch Signaling