The liver is the largest internal organ in mammals, and is important for the maintenance of normal physiological functions of other tissues and organs. Hepatitis, cirrhosis, liver cancer and other chronic liver diseases are serious threats to human health, and these problems are compounded by a scarcity of liver donors for transplantation therapies. Directed differentiation of embryonic stem cells to liver cells is a promising strategy for obtaining hepatocytes that can be used for cell transplantation. In vitro hepatocyte differentiation of embryonic stem cells requires a profound understanding of normal development during embryonic hepatogenesis. Here we provide a simple description of hepatogenesis in vivo and discuss directed differentiation of embryonic stem cells into hepatocytes in vitro.