Fate mapping studies of the mouse embryo reveal that progenitors of the definitive or gut endoderm are recruited from the epiblast during gastrulation and they are incorporated into a pre-existing population of visceral endoderm which may also contribute to the tissues of the embryonic gut. The definitive endoderm in the anterior region of the post-gastrula stage embryo is fated for forming the epithelial lining of the foregut and the tissues of the associated organs, such as the respiratory tract, thyroid, thymus, liver and pancreas. To gain insights into the molecular determinants of foregut development, we performed microarray analyses to identify endoderm-enriched transcripts in the foregut of early-somite-stage mouse embryos. Validation by in situ hybridization reveals that the transcripts coding for an atypical Rho GTPase, Rhou, are preferentially expressed in the foregut endoderm. Knockdown of Rhou by shRNA in embryonic stem cells affects the differentiation of endoderm derivatives in response to Activin treatment, but not that of the mesoderm. Rhou-deficient cells in embryoid bodies also display abnormal epithelial organization. In embryos generated from the knockdown ES cells by tetraploid complementation, the cells lining the embryonic foregut lose the epithelial architecture, with reduced apical concentration of F-actin and tendency of detaching from the epithelium. Differentiation of the Rhou-deficient endoderm is also impaired. A proper regulation of Rhou activity is therefore required for the maintenance of epithelial organization of the endoderm which appears to be a crucial intermediate step for endoderm differentiation.