The molecules responsible for hepatic differentiation from embryonic stem (ES) cells have yet to be elucidated. Here we have identified growth factors that allow direct hepatic fate-specification from ES cells by using simple adherent monolayer culture conditions. ES cell-derived hepatocytes showed liver-specific characteristics, including several metabolic activities, suggesting that ES cells can differentiate into functional hepatocytes without the requirement for embryoid body (EB) formation, in vivo transplantation, or a coculture system. Most importantly, transplantation of ES cell-derived hepatocytes in mice with cirrhosis showed significant therapeutic effects. In conclusion, this novel system for hepatic fate specification will help elucidate the precise molecular mechanisms of hepatic differentiation in vitro and could represent an attractive approach for developing stem cell therapies for treatment of hepatic disease in humans. Supplementary material for this article can be found on the HEPATOLOGY website ( http://www.interscience.wiley.com/jpages/0270-9139/suppmat/index.html).