Fibroblast growth factor (FGF) signaling and β‐catenin activation have been shown to be crucial for early embryonic liver development. This study determined the significance of FGF10‐mediated signaling in a murine embryonic liver progenitor cell population as well as its relation to β‐catenin activation. We observed that Fgf10^−/− and Fgfr2b^−/− mouse embryonic livers are smaller than wild‐type livers; Fgf10^−/− livers exhibit diminished proliferation of hepatoblasts. A comparison of β‐galactosidase activity as a readout of Fgf10 expression in Fgf10^+/LacZ mice and of β‐catenin activation in TOPGAL mice, demonstrated peak Fgf10 expression from E9 to E13.5 coinciding with peak β‐catenin activation. Flow cytometric isolation and marker gene expression analysis of LacZ⁺ cells from E13.5 Fgf10^+/LacZ and TOPGAL livers, respectively, revealed that Fgf10 expression and β‐catenin signaling occur distinctly in stellate/myofibroblastic cells and hepatoblasts, respectively. Moreover, hepatoblasts express Fgfr2b, which strongly suggests they can respond to recombinant FGF10 produced by stellate cells. Fgfr2b^−/−/TOPGAL^+/+ embryonic livers displayed less β‐galactosidase activity than livers of Fgfr2b^+/+/TOPGAL^+/+ littermates. In addition, cultures of whole liver explants in Matrigel or cell in suspension from E12.5 TOPGAL^+/+mice displayed a marked increase in β‐galactosidase activity and cell survival upon treatment with recombinant FGF10, indicating that FGFR (most likely FGFR2B) activation is upstream of β‐catenin signaling and promote hepatoblast survival. Conclusion: Embryonic stellate/myofibroblastic cells promote β‐catenin activation in and survival of hepatoblasts via FGF10‐mediated signaling. We suggest a role for stellate/myofibroblastic FGF10 within the liver stem cell niche in supporting the proliferating hepatoblast. (HEPATOLOGY 2007.)