A major goal for developmental biologists is to define the behaviors and molecular contents of differentiating cells. We have devised a strategy for isolating cells from diverse embryonic regions and stages in the zebrafish, using computer-guided laser photoconversion of injected Kaede protein and flow cytometry. This strategy enabled us to perform a genome-wide transcriptome comparison of germ layer precursor cells. Mesendoderm and ectoderm precursors cells isolated by this method differentiated appropriately in transplantation assays. Microarray analysis of these cells reidentified known genes at least as efficiently as previously reported strategies that relied on artificial mesendoderm activation or inhibition. We also identified a large set of uncharacterized mesendoderm-enriched genes as well as ectoderm-enriched genes. Loss-of-function studies revealed that one of these genes, the MAP kinase inhibitor dusp4, is essential for early development. Embryos injected with antisense morpholino oligonucleotides that targeted Dusp4 displayed necrosis of head tissues. Marker analysis during late gastrulation revealed a specific loss of sox17, but not of other endoderm markers, and analysis at later stages revealed a loss of foregut and pancreatic endoderm. This specific loss of sox17 establishes a new class of endoderm specification defect.