Zebrafish wnt2bb mutants initially fail to form a liver, but surprisingly the liver eventually forms in a majority of these embryos which then develop into fertile adults. This unexpected result raised the possibility that identifying the mechanisms of liver formation in wnt2bb mutants could provide insights into the poorly understood yet general principle of regulative development, a process by which some cells can change fate in order to compensate for a deficiency. Here, we identify two factors that underlie the regulative capacity of endodermal tissues: an intrinsic factor, Sox32, a transcription factor of the SoxF subfamily, and an extrinsic factor, Fgf10a. sox32 is expressed in the extrahepatic duct primordium which is not affected in wnt2bb mutants. Blocking Sox32function prevented liver formation in most wnt2bb mutants. fgf10a, which is expressed in the mesenchyme surrounding non-hepatic endodermal cells, negatively impacts the regulative capacity of endodermal tissues. In Wnt/β-catenin signaling deficient embryos, in which the liver completely fails to form, the repression of Fgf10a function allowed liver formation. Altogether, these studies reveal that there is more than one way to form a liver, and provide molecular insights into the phenomenon of tissue plasticity.