The three phases of liver development that are the focus of this review are: the specification of hepatoblasts within the endoderm, the lineage split of hepatoblasts into hepatocytes and biliary cells, and the interaction of these cells with different mesodermal cell derivatives during liver morphogenesis. Advances in these areas include new genes and experimental models for studying liver development, the role of HNF6 and HNF1beta transcription factors and notch signaling in the hepatocyte-biliary cell lineage decision, the identification of genomic targets for HNF4, and HNF4's role in controlling hepatic epithelial structure and the sinusoidal organization of the liver.