Although advances have been made in understanding cell differentiation, only rudimentary knowledge exists concerning how differentiated cells form tissues and organs. We studied liver organogenesis because the cell and tissue architecture of this organ is well defined. Approximately 60% of the adult liver consists of hepatocytes that are arranged as single-cell anastomosing plates extending from the portal region of the liver lobule toward the central vein. The basal surface of the hepatocytes is separated from adjacent sinusoidal endothelial cells by the space of Disse, where the exchange of substances between serum and hepatocytes takes place. The hepatocyte's apical surface forms bile canaliculi that transport bile to the hepatic ducts. Proper liver architecture is crucial for hepatic function and is commonly disrupted in disease states, including cirrhosis and hepatitis. Here we report that hepatocyte nuclear factor 4alpha (Hnf4alpha) is essential for morphological and functional differentiation of hepatocytes, accumulation of hepatic glycogen stores and generation of a hepatic epithelium. We show that Hnf4alpha is a dominant regulator of the epithelial phenotype because its ectopic expression in fibroblasts induces a mesenchymal-to-epithelial transition. Most importantly, the morphogenetic parameters controlled by Hnf4alpha in hepatocytes are essential for normal liver architecture, including the organization of the sinusoidal endothelium.