The embryonic endoderm gives rise to the epithelial lining of the digestive and respiratory systems and organs such as the thyroid, lungs, liver, gallbladder, and pancreas. Studies in Xenopus, zebrafish, and mice have revealed a conserved molecular pathway controlling vertebrate endoderm development. The TGFbeta/Nodal signaling pathway is at the top of this molecular hierarchy and controls the expression of a number of key transcription factors including Mix-like homeodomain proteins, Gata zinc finger factors, Sox HMG domain proteins, and Fox forkhead factors. Here we review the function of these molecules comparing and contrasting their roles in each model organism. Finally, we will describe how our understanding of the molecular pathway governing endoderm development in embryos is being used to differentiate embryonic stem cells in vitro along endodermal lineages, with the ultimate goal of making therapeutically useful tissue.