Human embryonic stem cells (hESCs) can provide insights into development of inaccessible human tissues such as embryonic endoderm. Progress in this area has been hindered by a lack of methods for isolating endodermal cells and tracing fates of their differentiated progeny. By using homologous recombination in human ESCs, we inserted an enhanced green fluorescent protein (eGFP) transgene into the SOX17 locus, a postulated marker of human endoderm. FACS purification and gene expression profiling confirmed that SOX17(+)-hESC progeny expressed endodermal markers and unveiled specific cell surface protein combinations that permitted FACS-based isolation of primitive gut tube endodermal cells produced from unmodified human ESCs and from induced pluripotent stem cells (iPSC). Differentiating SOX17(+) endodermal cells expressed markers of liver, pancreas, and intestinal epithelium in vitro and gave rise to endodermal progeny in vivo. Thus, prospective isolation, lineage tracing, and developmental studies of SOX17(+) hESC progeny have revealed fundamental aspects of human endodermal biology.