For plants to survive on land, the last common ancestor of all land plants must have undergone a series of adaptations. These include water conducting cells (WCC) that enabled efficient water transportation and thus an increase in shoot size. Interestingly, the liverwort Marchantia polymorpha has lost internalised WCC, but has evolved new ways to cope with water transportation in the form of external WCC called pegged rhizoids. These pegged rhizoids are unicellular structures that are dead at maturity and reinforce their cell walls, much like the tracheary element cells in the xylem of flowering plants. Although, in contrast to the tracheary element differentiation that is regulated by the VND genes, pegged rhizoid formation has been shown to be regulated by orthologues of the ZHOUPI and ICE transcription factors that are required for endosperm autolysis in the seeds of Arabidopsis thaliana. Mpzou1 as well as Mpice1 null mutants fail to produce any pegged rhizoids, whereas misexpressing MpZOU1 under the hyperactive MpEF1α promoter leads to plants that show only pegged rhizoids. Using transcriptional profiling of our mutants, we identified genes involved in programmed cell death and cell wall modification as potential effectors of pegged rhizoid differentiation. Here, we report new findings using a steroid-inducible MpZOU1 line, where we validated proposed downstream effector genes of MpZOU1 and characterised pegged rhizoid development. Furthermore, we show the effect of knock-outs of selected downstream targets of MpZOU1 on pegged rhizoid development to better understand the genetic network involved.