Endoderm, one of three primary germ layers of vertebrate embryos, makes major contributions to the respiratory and gastrointestinal tracts and associated organs, including liver and pancreas. Placement and patterning of these organs relies on the left-right organiser – known as Kupffer’s Vesicle (KV) in zebrafish. The transcription factors Sox32 and Sox17 are members of the zebrafish SoxF subfamily.Sox32andsox17arose from a duplication of ancestralSox17in the teleost lineage. Sox32 inducessox17expression in the early embryo and is required for the specification of endoderm and KV progenitors. Zebrafish Sox17 is implicated in KV morphogenesis. In mammals,Sox17is vital for endoderm organ formation and can induce endoderm progenitor identity. Phenotypic evidence therefore suggests functional similarities between zebrafish Sox32 and Sox17 with mammalian SOX17. We sought to explore the functional differences and potential similarities between these proteins in the early zebrafish embryo. Our results indicate that, unlike Sox32, human SOX17 cannot induce endoderm specification in zebrafish. Furthermore, using hybrid protein functional analyses, we show that Sox32 specificity for the endoderm gene regulatory network is linked to evolutionary divergence in its HMG domain from its paralogue Sox17. Additionally, changes in the C-terminal regions of Sox32 and Sox17 underpin their differing target specificity and divergence in mediating differential gene regulatory programmes. Finally, we establish that specific conserved peptides in the C-terminal domain are essential for the role of Sox17 in establishing correct organ asymmetry. Overall, our results provide novel insights into vertebrate endoderm development, left-right patterning, and the evolution of SoxF transcription factor function.