AbstractWhile much is known about Groucho corepressors in Drosophila development, less is known about Grg homologs in mammalian embryogenesis. The transcription factors FoxA1 and FoxA2 are redundantly necessary for liver‐inductive competence of the endoderm, and recently we found that FoxA factors bind Grg3, recruit the corepressor to FoxA target genes, and cause transcriptional repression, when Grg3 is ectopically expressed in adult liver cell lines that express little or no endogenous Grg. Unexpectedly, we now find that Grg1 and Grg3 mRNAs are co‐expressed with FoxA factors in the foregut endoderm, prior to liver differentiation, though only Grg3 protein is expressed there. Grg3 mRNA and protein are extinguished at the onset of liver differentiation. Lentiviral delivery of Grg3 to explants of foregut endoderm suppresses liver gene induction. We suggest that Grg expression in the endoderm helps suppress the liver program and find that endodermal competence involves a balance between activators and corepressors. Developmental Dynamics 239:980–986, 2010. © 2010 Wiley‐Liss, Inc.