Fibroblast growth factor (FGF) signaling and β-catenin activation have been shown to be crucial for early embryonic liver development. This study determined the significance of FGF10-mediated signaling in a murine embryonic liver progenitor cell population as well as its relation to β-catenin activation. We observed that Fgf10−/− and Fgfr2b−/− mouse embryonic livers are smaller than wild-type livers; Fgf10−/− livers exhibit diminished proliferation of hepatoblasts. A comparison of β-galactosidase activity as a readout of Fgf10 expression in Fgf10+/LacZ mice and of β-catenin activation in TOPGAL mice, demonstrated peak Fgf10 expression from E9 to E13.5 coinciding with peak β-catenin activation. Flow cytometric isolation and marker gene expression analysis of LacZ+ cells from E13.5 Fgf10+/LacZ and TOPGAL livers, respectively, revealed that Fgf10 expression and β-catenin signaling occur distinctly in stellate/myofibroblastic cells and hepatoblasts, respectively. Moreover, hepatoblasts express Fgfr2b, which strongly suggests they can respond to recombinant FGF10 produced by stellate cells. Fgfr2b−/−/TOPGAL+/+ embryonic livers displayed less β-galactosidase activity than livers of Fgfr2b+/+/TOPGAL+/+ littermates. In addition, cultures of whole liver explants in Matrigel or cell in suspension from E12.5 TOPGAL+/+mice displayed a marked increase in β-galactosidase activity and cell survival upon treatment with recombinant FGF10, indicating that FGFR (most likely FGFR2B) activation is upstream of β-catenin signaling and promote hepatoblast survival. Conclusion: Embryonic stellate/myofibroblastic cells promote β-catenin activation in and survival of hepatoblasts via FGF10-mediated signaling. We suggest a role for stellate/myofibroblastic FGF10 within the liver stem cell niche in supporting the proliferating hepatoblast. (HEPATOLOGY 2007.)