The transcriptional modulator Cited2 is induced by various biological stimuli including hypoxia, cytokines, growth factors, lipopolysaccharide (LPS) and flow shear. In this study, we report that Cited2 is required for mouse fetal liver development. Cited2(-/-) fetal liver displays hypoplasia with higher incidence of cell apoptosis, and exhibits disrupted cell-cell contact, disorganized sinusoidal architecture, as well as impaired lipid metabolism and hepatic gluconeogenesis. Furthermore, we demonstrated the physical and functional interaction of Cited2 with liver-enriched transcription factor HNF4alpha. Chromatin immunoprecipitation (ChIP) assays further confirmed the recruitment of Cited2 onto the HNF4alpha-responsive promoters and the reduced HNF4alpha binding to its target gene promoters in the absence of Cited2. Taken together, this study suggests that fetal liver defects in mice lacking Cited2 result, at least in part, from its defective coactivation function for HNF4alpha.