AbstractWnt/β‐catenin pathway plays an important role in regulating embryonic development. Hepatocytes differentiate from endoderm during development. Hepatic progenitor cells (HPCs) have been isolated from fetal liver and extrahepatic tissues. Most current studies in liver development and hepatic differentiation have been focused on Wnts, β‐catenin, and their receptors. Here, we sought to determine the role of Wnt antagonists in regulating hepatic differentiation of fetal liver‐derived HPCs. Using mouse liver tissues derived from embryonic day E12.5 to postnatal day (PD) 28, we found that 13 of the 19 Wnt genes and almost all of Wnt receptors/co‐receptors were expressed in most stages. However, Wnt antagonists SFRP2, SFRP3, and Dkk2 were only detected in the early stages. We established and characterized the reversible stable HPCs derived from E14.5 mouse fetal liver (HP14.5). HP14.5 cells were shown to express high levels of early liver progenitor cell markers, but low levels or none of late liver markers. HP14.5 cells were shown to differentiate into mature hepatocytes upon dexamethasone (Dex) stimulation. Dex‐induced late marker expression and albumin promoter activity in HP14.5 cells were inhibited by exogenous expression of SFRP3. Furthermore, Dex‐induced glycogen synthesis of PAS‐positive HP14.5 cells was significantly inhibited by SFRP3. Therefore, our results have demonstrated that the expression of Wnt antagonists decreases as hepatic differentiation progresses, suggesting that a balanced Wnt signaling may be critical during mouse liver development and hepatic differentiation. J. Cell. Biochem. 108: 295–303, 2009. © 2009 Wiley‐Liss, Inc.