Understanding the fetal hepatic niche is essential for optimizing the generation of functional hepatocyte-like cells (hepatic cells) from human embryonic stem cells (hESCs). Here, we show that KDR (VEGFR2/FLK-1), previously assumed to be mostly restricted to mesodermal lineages, marks a hESC-derived hepatic progenitor. hESC-derived endoderm cells do not express KDR but, when cultured in media supporting hepatic differentiation, generate KDR+ hepatic progenitors and KDR− hepatic cells. KDR+ progenitors require active KDR signaling both to instruct their own differentiation into hepatic cells and to non-cell-autonomously support the functional maturation of cocultured KDR− hepatic cells. Analysis of human fetal livers suggests that similar progenitors are present in human livers. Lineage tracing in mice provides in vivo evidence of a KDR+ hepatic progenitor for fetal hepatoblasts, adult hepatocytes, and adult cholangiocytes. Altogether, our findings reveal that KDR is a conserved marker for endoderm-derived hepatic progenitors and a functional receptor instructing early liver development.