Mouse embryonic stem cells can differentiate into various cell types within cell aggregates called embryoid bodies (EBs). This structure consists of ectodermal, mesodermal, and endodermal tissues, which resemble the embryo of egg-cylinder stage. After 8-10 days in culture, about half of the EBs expand into large cystic structures homologous to visceral yolk sac of postimplantation embryos. To study endoderm differentiation at molecular level, we examined expression of endoderm marker genes during the processes of EB development. alpha-Fetoprotein (AFP) and transthyretin (TTR) transcripts increased at the stage when embryoid bodies began to form yolk-sac-like structures and were expressed strongly thereafter. Expression of hepatocyte nuclear factor (HNF) 4, a variant form of HNF1 (also called HNF1beta), and HNF3beta started before the onset of AFP and TTR expression. HNF1 (also called HNF1alpha) expression began a few days after the onset of the expression of the transcription factors described above. Serum albumin (ALB) transcript was only found in late large cystic EBs. Also, AFP gene expression preceded ALB gene expression. These results suggest that the patterns of endoderm gene expression during EB development reflect the order found during mouse development in vivo, and EB formation may serve as an in vitro system to study the differentiation process.