The precise origins of myocardial progenitors and their subsequent contribution to the developing heart has been an area of considerable activity within the field of cardiovascular biology. How these progenitors are regulated and what signals are responsible for their development are, however, much less well understood. Clearly, not only is there a need to identify factors that regulate the transition from proliferation of cardioblasts to differentiation of cardiac muscle, but it is also necessary to identify factors that maintain an adequate pool of undifferentiated myocyte precursors as a prerequisite to preventing organ hypoplasia and congenital heart disease. Here, we report how upregulation of the basic helix-loop-helix (bHLH) transcription factor Hand1, restricted exclusively to Hand1-expressing cells, brings about a significant extension of the heart tube and extraneous looping caused by the elevated proliferation of cardioblasts in the distal outflow tract. This activity is independent of the further recruitment of extracardiac cells from the secondary heart field and permissive for the continued differentiation of adjacent myocardium. Culture studies using embryonic stem (ES) cell-derived cardiomyocytes revealed that, in a Hand1-null background, there is significantly elevated cardiomyocyte differentiation, with an apparent default mesoderm pathway to a cardiomyocyte fate. However, Hand1 gain of function maintains proliferating precursors resulting in delayed and significantly reduced cardiomyocyte differentiation that is mediated by the prevention of cell-cycle exit, by G1 progression and by increased cell division. Thus, this work identifies Hand1 as a crucial cardiac regulatory protein that controls the balance between proliferation and differentiation in the developing heart, and fills a significant gap in our understanding of how the myocardium of the embryonic heart is established.