Liver is a prime organ responsible for synthesis, metabolism, and detoxification. The organ is endodermal in origin and its development is regulated by temporal, complex, and finely balanced cellular and molecular interactions that dictate its origin, growth, and maturation. We discuss the relevance of endoderm patterning, which truly is the first step toward mapping of domains that will give rise to specific organs. Once foregut patterning is completed, certain cells within the foregut endoderm gain competence in the form of expression of certain transcription factors that allow them to respond to certain inductive signals. Hepatic specification is then a result of such inductive signals, which often emanate from the surrounding mesenchyme. During hepatic specification bipotential hepatic stem cells or hepatoblasts become apparent and undergo expansion, which results in a visible liver primordium during the stage of hepatic morphogenesis. Hepatoblasts next differentiate into either hepatocytes or cholangiocytes. The expansion and differentiation is regulated by cellular and molecular interactions between hepatoblasts and mesenchymal cells including sinusoidal endothelial cells, stellate cells, and also innate hematopoietic elements. Further maturation of hepatocytes and cholangiocytes continues during late hepatic development as a function of various growth factors. At this time, liver gains architectural novelty in the form of zonality and at cellular level acquires polarity. A comprehensive elucidation of such finely tuned developmental cues have been the basis of transdifferentiation of various types of stem cells to hepatocyte-like cells for purposes of understanding health and disease and for therapeutic applications.