β‐Catenin, the central component of the canonical Wnt pathway, plays important roles in the processes of liver regeneration, growth, and cancer. Previously, we identified temporal expression of β‐catenin during liver development. Here, we characterize the hepatic phenotype, resulting from the successful deletion of β‐catenin in the developing hepatoblasts utilizing Foxa3‐cyclization recombination and floxed‐β‐catenin (exons 2 through 6) transgenic mice. β‐Catenin loss in developing livers resulted in significantly underdeveloped livers after embryonic day 12 (E12) with lethality occurring at around E17 stages. Histology revealed an overall deficient hepatocyte compartment due to (1) increased cell death due to oxidative stress and apoptosis, and (2) diminished expansion secondary to decreased cyclin‐D1 and impaired proliferation. Also, the remnant hepatocytes demonstrated an immature phenotype as indicated by high nuclear to cytoplasmic ratio, poor cell polarity, absent glycogen, and decreased expression of key liver‐enriched transcription factors: CCAAT‐enhancer binding protein‐α and hepatocyte nuclear factor‐4α. A paucity of primitive bile ducts was also observed. While the stem cell assays demonstrated no intrinsic defect in hematopoiesis, distorted hepatic architecture and deficient hepatocyte compartments resulted in defective endothelial cell organization leading to overall fetal pallor. Conclusion: β‐Catenin regulates multiple, critical events during the process of hepatic morphogenesis, including hepatoblast maturation, expansion, and survival, making it indispensable to survival. (HEPATOLOGY 2008.)