Little is known about genes that govern the development of the definitive endoderm in mammals; this germ layer gives rise to the intestinal epithelium and various other cell types, such as hepatocytes, derived from the gut. The discovery that the rat hepatocyte transcription factor HNF3 is similar to the Drosophila forkhead gene, which plays a critical role in gut development in the fly, led us to isolate genes containing the HNF3/forkhead (HFH) domain that are expressed in mouse endoderm development. We recovered mouse HNF3 beta from an embryo cDNA library and found that the gene is first expressed in the anterior portion of the primitive streak at the onset of gastrulation, in a region where definitive endoderm first arises. Its expression persists in axial structures derived from the mouse equivalent of Hensen's node, namely definitive endoderm and notochord, and in the ventral region of the developing neural tube. Expression of the highly related gene, HNF3 alpha, appears to initiate later than HNF3 beta and is first seen in midline endoderm cells. Expression subsequently appears in notochord, ventral neural tube, and gut endoderm in patterns similar to HNF3 beta. Microscale DNA binding assays show that HNF3 proteins are detectable in the midgut at 9.5 days p.c. At later stages HNF3 mRNAs and protein are expressed strongly in endoderm-derived tissues such as the liver. HNF3 is also the only known hepatocyte-enriched transcription factor present in a highly de-differentiated liver cell line that retains the capacity to redifferentiate to the hepatic phenotype. Taken together, these studies suggest that HNF3 alpha and HNF3 beta are involved in both the initiation and maintenance of the endodermal lineage. We also discovered a novel HFH-containing gene, HFH-E5.1, that is expressed transiently in posterior ectoderm and mesoderm at the primitive streak stage, and later predominantly in the neural tube. HFH-E5.1 is highly similar in structure and expression profile to the Drosophila HFH gene FD4, suggesting that HFH family members have different, evolutionarily conserved roles in development.