Understanding the biological potential of fetal stem/progenitor cells will help define mechanisms in liver development and homeostasis. We isolated epithelial fetal human liver cells and established phenotype-specific changes in gene expression during continuous culture conditions. Fetal human liver epithelial cells displayed stem cell properties with multilineage gene expression, extensive proliferation and generation of mesenchymal lineage cells, although the initial epithelial phenotype was rapidly supplanted by meso-endodermal phenotype in culture. This meso-endodermal phenotype was genetically regulated through cytokine signaling, including transforming growth factor beta, bone morphogenetic protein, fibroblast growth factor and other signaling pathways. Reactivation of HNF3alpha (FOXA1) transcription factor, a driver of hepatic specification in the primitive endoderm, indicated that the meso-endodermal phenotype represented an earlier developmental stage of cells. We found that fetal liver epithelial cells formed mature hepatocytes in vivo, including after genetic manipulation using lentiviral vectors, offering convenient assays for analysis of further cell differentiation and fate. Taken together, these studies demonstrate plasticity in fetal liver epithelial stem cells, offer paradigms for defining mechanisms regulating lineage switching in stem cells, and provide potential avenues for regulating cell phenotypes for applications of stem cells, such as for cell therapy.