The use of embryonic stem cell (ESC) differentiation to generate functional hepatic or pancreatic progenitors and as a tool for developmental biology is limited by an inability to isolate in vitro equivalents of regionally specified anterior definitive endoderm (ADE). To address this, we devised a strategy using a fluorescent reporter gene under the transcriptional control of the anterior endoderm marker Hex alongside the definitive mesendoderm marker Cxcr4. Isolation of Hex(+)Cxcr4(+) differentiating ESCs yielded a population expressing ADE markers that both can be expanded and is competent to undergo differentiation toward liver and pancreatic fates. Hex reporter ESCs were also used to define conditions for ADE specification in serum-free adherent culture and revealed an unexpected role for FGF signaling in the generation of ADE. Our findings in defined monolayer differentiation suggest FGF signaling is an important regulator of early anterior mesendoderm differentiation rather than merely a mediator of morphogenetic movement.