Current understanding infers a neural crest origin of thyroid C cells, the major source of calcitonin in mammals and ancestors to neuroendocrine thyroid tumors. The concept is primarily based on investigations in quail–chick chimeras involving fate mapping of neural crest cells to the ultimobranchial glands that regulate Ca2+ homeostasis in birds, reptiles, amphibians and fishes, but whether mammalian C cell development involves a homologous ontogenetic trajectory has not been experimentally verified. With lineage tracing, we now provide direct evidence that Sox17+ anterior endoderm is the only source of differentiated C cells and their progenitors in mice. Like many gut endoderm derivatives, embryonic C cells were found to coexpress pioneer factors forkhead box (Fox) a1 and Foxa2 before neuroendocrine differentiation takes place. In the ultimobranchial body epithelium emerging from pharyngeal pouch endoderm in early organogenesis, differential Foxa1/Foxa2 expression distinguished two spatially separated pools of C cell precursors with different growth properties. A similar expression pattern was recapitulated in medullary thyroid carcinoma cells in vivo, consistent with a growth-promoting role of Foxa1. In contrast to embryonic precursor cells, C cell-derived tumor cells invading the stromal compartment downregulated Foxa2, foregoing epithelial-to-mesenchymal transition designated by loss of E-cadherin;bothFoxa2 andE-cadherinwere re-expressed atmetastatic sites. These findings revise mammalian C cell ontogeny, expand the neuroendocrine repertoire of endoderm and redefine the boundaries of neural crest diversification.The data further underpin distinct functions of Foxa1 and Foxa2 in both embryonic and tumor development.