Embryonic stem cell-derived endoderm is critical for the development of cellular therapies for the treatment of disease such as diabetes, liver cirrhosis, or pulmonary emphysema. Here, we describe a novel approach to induce endoderm from mouse embryonic stem cells (mES) using fibronectin-coated collagen gels. This technique results in a homogenous endoderm-like cell population, demonstrating endoderm-specific gene and protein expression, which remains committed following in vivo transplantation. In this system, activin, normally an endoderm inducer caused an 80% decrease in the Foxa2 positive endoderm fraction, while follistatin increased the Foxa2 positive endoderm fraction to 78%. Our work suggests that activin delays the induction of endoderm through it transient precursors, the epiblast and mesendoderm. Long term differentiation, displays a two-fold reduction in hepatic gene expression and three-fold reduction in hepatic protein expression of activin-treated cells compared to follistatin-treated cells. Moreover, subcutaneous transplantation of activin-treated cells in a syngeneic mouse generated a heterogeneous teratoma-like mass, suggesting these were a more primitive population. In contrast, follistatin-treated cells resulted in an encapsulated epithelial-like mass, suggesting these cells remained committed to the endoderm lineage. In conclusion, we demonstrate a novel technique to induce the direct differentiation of endoderm from mES cells without cell sorting. In addition, our work suggests a new role for activin in induction of the precursors to endoderm, and a new endoderm-enrichment technique using follistatin.