Unlike mammals and birds, teleost fish undergo external embryogenesis, and therefore their embryos are constantly challenged by stresses from their living environment. These stresses, when becoming too harsh, will cause arrest of cell proliferation, abnormal cell death or senescence. Such organisms have to evolve a sophisticated anti-stress mechanism to protect the process of embryogenesis/organogenesis. However, very few signaling molecule(s) mediating such activity have been identified. liver-enriched gene 1 (leg1) is an uncharacterized gene that encodes a novel secretory protein containing a single domain DUF781 (domain of unknown function 781) that is well conserved in vertebrates. In the zebrafish genome, there are two copies of leg1, namely leg1a and leg1b. leg1a and leg1b are closely linked on chromosome 20 and share high homology, but are differentially expressed. In this report, we generated two leg1a mutant alleles using the TALEN technique, then characterized liver development in the mutants. We show that a leg1a mutant exhibits a stress-dependent small liver phenotype that can be prevented by chemicals blocking the production of reactive oxygen species. Further studies reveal that Leg1a binds to FGFR3 and mediates a novel anti-stress pathway to protect liver development through enhancing Erk activity. More importantly, we show that the binding of Leg1a to FGFR relies on the glycosylation at the 70th asparagine (Asn(70) or N(70)), and mutating the Asn(70) to Ala(70) compromised Leg1's function in liver development. Therefore, Leg1 plays a unique role in protecting liver development under different stress conditions by serving as a secreted signaling molecule/modulator.