Reprogramming has been shown to involve EMT–MET; however, its role in cell differentiation is unclear. We report here that in vitro differentiation of hESCs to hepatic lineage undergoes a sequential EMT–MET with an obligatory intermediate mesenchymal phase. Gene expression analysis reveals that Activin A-induced formation of definitive endoderm (DE) accompanies a synchronous EMT mediated by autocrine TGFβ signalling followed by a MET process. Pharmacological inhibition of TGFβ signalling blocks the EMT as well as DE formation. We then identify SNAI1 as the key EMT transcriptional factor required for the specification of DE. Genetic ablation of SNAI1 in hESCs does not affect the maintenance of pluripotency or neural differentiation, but completely disrupts the formation of DE. These results reveal a critical mesenchymal phase during the acquisition of DE, highlighting a role for sequential EMT–METs in both differentiation and reprogramming.