Human embryonic stem cells (hESCs), via their ability to differentiate into a plethora of cell types, offer an attractive approach for regenerative medicine, but they also offer a means of studying cell differentiation, and hence development, ex vivo. Here, Stephen Duncan and co-workers analyse the differentiation of hESCs to probe the molecular mechanisms that underlie human hepatocyte differentiation (see p. 4143). Using a protocol in which hESCs differentiate into hepatocytes in a stepwise manner, the researchers show that each stage of the differentiation process is associated with a characteristic mRNA profile, as shown by microarrays. Importantly, they show that the transcription factor HNF4A, which has been implicated in liver development, is essential for specifying hepatic progenitors; the onset of HNF4A expression is associated with specification of the hepatic lineage from hESCs, and shRNA-mediated knockdown of HNF4A prevents hESC differentiation into hepatic progenitors. These and other studies demonstrate that HNF4A establishes the expression of a network of transcription factors that promote hepatocyte cell fate.