The anterior heart field (AHF) encompasses a niche in which mesoderm-derived cardiac progenitors maintain their multipotent and undifferentiated nature in response to signals from surrounding tissues. Here, we investigate the signaling mechanism that promotes the shift from proliferating cardiac progenitors to differentiating cardiomyocytes in chick embryos. Genomic and systems biology approaches, as well as perturbations of signaling molecules, in vitro and in vivo, reveal tight crosstalk between the bone morphogenetic protein (BMP) and fibroblast growth factor (FGF) signaling pathways within the AHF niche: BMP4 promotes myofibrillar gene expression and cardiomyocyte contraction by blocking FGF signaling. Furthermore, inhibition of the FGF-ERK pathway is both sufficient and necessary for these processes, suggesting that FGF signaling blocks premature differentiation of cardiac progenitors in the AHF. We further revealed that BMP4 induced a set of neural crest-related genes, including MSX1. Overexpression of Msx1 was sufficient to repress FGF gene expression and cell proliferation, thereby promoting cardiomyocyte differentiation. Finally, we show that BMP-induced cardiomyocyte differentiation is diminished following cranial neural crest ablation, underscoring the key roles of these cells in the regulation of AHF cell differentiation. Hence, BMP and FGF signaling pathways act via inter- and intra-regulatory loops in multiple tissues, to coordinate the balance between proliferation and differentiation of cardiac progenitors.