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.