In the developing atrioventricular (AV) valve, limb bud, and somites, cartilage cell lineage differentiation is regulated by bone morphogenetic protein (BMP), while fibroblast growth factor (FGF) controls tendon cell fate. We observed aggrecan and sox9, characteristic of cartilage cell types, and scleraxis and tenascin, characteristic of tendon cell types, in developing avian semilunar valves. Addition of BMP4 to outflow tract (OFT) precursor cells of young (E4.5) but not older (E6) chick embryos activated Smad1/5/8 and induced sox9 and aggrecan expression, while FGF4 treatment increased phosphorylated MAPK (dpERK) signaling and promoted expression of scleraxis and tenascin. These results identify BMP and FGF pathways that promote expression of cartilage- or tendon-like characteristics in semilunar valve precursor cells. In contrast to AV valve precursor cells, which diversify into leaflets (cartilage-like) or chordae tendineae (tendon-like), semilunar valve cells exhibit both cartilage- and tendon-like characteristics in the developing and mature valve cusp.