Human embryonic stem cells are pluripotent cells that can serve as a cell source for transplantation medicine, and as a tool to study human embryogenesis. We investigate here the potential of human embryonic stem cells to differentiate into hepatic cells. We have characterized the expression level of liver-enriched genes in undifferentiated and differentiated human embryonic stem cells by DNA microarrays. Our analysis revealed a subset of fetal hepatic enriched genes that are expressed in human embryonic stem cells upon differentiation into embryoid bodies. In order to isolate the hepatic-like cells, we introduced a reporter gene regulated by a hepatocyte-specific promoter into human embryonic stem cells. We isolated clones of human embryonic stem cells that express enhanced green fluorescent protein upon in vitro differentiation. Through immunostaining, we showed that most of these cells express albumin, while some cells still express the earlier expressed protein alpha-fetoprotein. Using fluorescence activated cell sorter, we were able to sort out the fluorescent differentiated cells and expand them for a few more weeks. This is the first report to demonstrate the possibility of purifying differentiated derivatives of human embryonic stem cells and culturing them further. Through confocal microscopy, we detected clusters of hepatic-like cells in 20-day-old embryoid bodies and in teratomas. As observed during embryonic development, we showed that in teratomas, the hepatic-like endodermal cells develop next to cardiac mesodermal cells. In order to examine the secreted factors involved in the induction of hepatic differentiation, human embryonic stem cells were grown in the presence of various growth factors, demonstrating the potential involvement of acidic fibroblast growth factor in the differentiation. In conclusion, given certain growth conditions and genetic manipulation, we can now differentiate and isolate hepatic-like cells from human embryonic stem cells.