Embryonic stem (ES) cells may represent an alternative source of functionally intact cardiomyocytes for the causal treatment of cardiovascular diseases. However, this requires cardiac-specific differentiation of stem cells and the selection of pure lineages consisting of early embryonic cardiomyocytes. Therefore, an understanding of the basic mechanisms of heart development is essential for selective differentiation of embryonic stem cells into cardiac cells. The development of cardiac cells from embryonic stem cells is regulated by several soluble factors and signalling molecules together with cardiac specific transcription factors such as the zinc-finger GATA proteins and Nkx-2.5. GATA-4 and Nkx-2.5 seem to be essential for heart development. The use of enhanced green fluorescent protein (EGFP) under the control of cardiac-specific promoters in combination with the ES cell system has allowed for the functional characterisation of cardiac precursor cells. Embryonic stem cell-derived cardiomyocytes developmentally express similar cardiac-specific proteins, ion channels and signalling molecules to that of adult cardiomyocytes. Furthermore, identification of growth factors and signalling molecules under cell culture conditions is crucial for the selective cardiac differentiation of embryonic stem cells. Therefore, serum-free culture conditions have to be established in order to examine the influence of different growth factors and signalling molecules on cardiac development and/or formation from ES cells. Although significant progress has been made in generating cardiac cell lineage by the combination of genetically manipulative methods with selective culture conditions for cell transplantation therapy, one of the remaining future challenges for transplantation in humans is the immunological rejection of the engrafted cardiomyocytes.