Pancreatic cells can be converted to hepatocytes by overexpression of C/EBPbeta (Shen, C-N, Slack, J.M.W. and Tosh, D., 2000. Molecular basis of transdifferentiation of pancreas to liver. Nature Cell Biology 2: 879-887). This suggested that expression of one or more C/EBP factors may distinguish liver and pancreas in early development. We have now studied the early expression of C/EBPalpha and C/EBPbeta in the mouse embryo and show that both are expressed exclusively in the early liver bud and not in the pancreatic buds. Their expression is identical to that of hepatocyte nuclear factor 4 (HNF4), another key hepatic transcription factor and alpha-fetoprotein (AFP), a differentiation product characteristic of immature hepatocytes. Both are complementary to the early expression of Pdx1, a key pancreatic transcription factor. These results are consistent with the idea that C/EBP factors are master regulators for liver development.