We report here the discovery and characterization of a gene, ELABELA (ELA), encoding a conserved hormone of 32 amino acids. Present in human embryonic stem cells, ELA is expressed at the onset of zebrafish zygotic transcription and is ubiquitous in the naive ectodermal cells of the embryo. Using zinc-finger-nuclease-mediated gene inactivation in zebrafish, we created an allelic series of ela mutants. ela null embryos have impaired endoderm differentiation potential marked by reduced gata5 and sox17 expression. Loss of Ela causes embryos to develop with a rudimentary heart or no heart at all, surprisingly phenocopying the loss of the apelin receptor (aplnr), which we show serves as Ela's cognate G protein-coupled receptor. Our results reveal the existence of a peptide hormone, ELA, which, together with APLNR, forms an essential signaling axis for early cardiovascular development.