Organogenesis requires expansion of the embryonic vascular plexus that migrates into developing organs through a process called angiogenesis. Mesodermal progenitors are thought to derive endothelial cells (ECs) that contribute to both embryonic vasculogenesis and the subsequent organ angiogenesis. Here, we demonstrate that during development of the liver, which is an endoderm derivative, a subset of ECs is generated from FOXA2+ endoderm-derived fetal hepatoblast progenitor cells expressing KDR (VEGFR2/FLK-1). Using human and mouse embryonic stem cell models, we demonstrate that KDR+FOXA2+ endoderm cells developing in hepatic differentiation cultures generate functional ECs. This introduces the concept that ECs originate not exclusively from mesoderm but also from endoderm, supported in Foxa2 lineage-tracing mouse embryos by the identification of FOXA2+ cell-derived CD31+ ECs that integrate the vascular network of developing fetal livers.