The developmental mechanisms underlying human congenital heart disease (CHD) are poorly understood. Atrial septal defects (ASDs) can result from haploinsufficiency of cardiogenic transcription factors including TBX5. We demonstrated that Tbx5 is required in the second heart field (SHF) for atrial septation in mice. Conditional Tbx5 haploinsufficiency in the SHF but not the myocardium or endocardium caused ASDs. Tbx5 SHF knockout embryos lacked atrial septum progenitors. We found that Tbx5 mutant SHF progenitors demonstrated cell-cycle progression defects and that Tbx5 regulated cell-cycle progression genes including Cdk6. Activated hedgehog (Hh) signaling rescued ASDs in Tbx5 mutant embryos, placing Tbx5 upstream or parallel to Hh in cardiac progenitors. Tbx5 regulated SHF Gas1 and Osr1 expression, supporting both pathways. These results describe a SHF Tbx5-Hh network required for atrial septation. A paradigm defining molecular requirements in SHF cardiac progenitors for cardiac septum morphogenesis has implications for the ontogeny of CHD.