Recent studies support the existence of a common progenitor for the cardiac and endothelial cell lineages, but the underlying transcriptional networks responsible for specification of these cell fates remain unclear. Here we demonstrated that Ets-related protein 71 (Etsrp71), a newly discovered ETS family transcription factor, was a novel downstream target of the homeodomain protein, Nkx2–5. Using genetic mouse models and molecular biological techniques, we demonstrated that Nkx2–5 binds to an evolutionarily conserved Nkx2–5 response element in the Etsrp71 promoter and induces the Etsrp71 gene expression in vitro and in vivo. Etsrp71 was transiently expressed in the endocardium/endothelium of the developing embryo (E7.75-E9.5) and was extinguished during the latter stages of development. Using a gene disruption strategy, we found that Etsrp71 mutant embryos lacked endocardial/endothelial lineages and were nonviable. Moreover, using transgenic technologies and transcriptional and chromatin immunoprecipitation (ChIP) assays, we further established that Tie2 is a direct downstream target of Etsrp71. Collectively, our results uncover a novel functional role for Nkx2–5 and define a transcriptional network that specifies an endocardial/endothelial fate in the developing heart and embryo.