The extraembryonic endoderm of mammals is essential for nutritive support of the foetus and patterning of the early embryo. Visceral and parietal endoderm are major subtypes of this lineage with the former exhibiting most, if not all, of the embryonic patterning properties. Extraembryonic endoderm (XEN) cell lines derived from the primitive endoderm of mouse blastocysts represent a cell culture model of this lineage, but are biased towards parietal endoderm in culture and in chimaeras. Here, I further characterise XEN cells and show that these cell lines exhibit high levels of heterogeneity. In an effort for XEN cells to adopt visceral endoderm character different aspects of the in vivo environment were mimicked. I found that BMP4 and laminin promote a mesenchymal-to-epithelial transition of XEN cells with upregulation of epithelial markers and downregulation of mesenchymal markers. Gene expression analysis showed the differentiated XEN cells most resembled extraembryonic visceral endoderm. Correspondingly, inhibition of Erk and BMP signalling drives XEN cells toward parietal endoderm fate. Finally, I show that BMP4 treatment of freshly isolated parietal endoderm from Reichert’s membrane promotes its visceral endoderm differentiation. This suggests that parietal endoderm is still developmentally plastic and can be transdifferentiated to a visceral endoderm in response to BMP. Generation of visceral endoderm from XEN cells uncovers the true potential of these blastocyst-derived cells and is a significant step towards modelling early developmental events ex vivo.