The transcription factor FoxO1 has been shown to dynamically regulate cell fate across diverse cell types. Here, we employ a human induced pluripotent stem cell (hiPSC)-to-hepatocyte differentiation system that recapitulates the process of hepatocyte specification and differentiation in the human embryo to investigate FoxO1 as a participant in the molecular events required to execute the initial stages of liver development. We demonstrate that FoxO1 is expressed in hiPSC and at all stages of hepatocyte differentiation: definitive endoderm, specified hepatocytes, immature hepatoblasts, and mature hepatocyte-like cells. Disruption of FoxO1 activity by addition of the small molecule inhibitor AS1842856 at the beginning of the differentiation protocol abolishes the formation of definitive endoderm, as indicated by the loss of endoderm gene expression and the gain in expression of multiple mesoderm genes. Moreover, we show that FoxO1 binds to the promoters of two genes with important roles in endoderm differentiation whose expression is significantly downregulated in AS1842856 treated versus untreated cells. These findings reveal a new role for FoxO1 as an essential transcriptional regulator for the establishment of definitive endoderm in humans.