Hearts of mice lacking Isl1, a LIM homeodomain transcription factor, are completely missing the outflow tract, right ventricle, and much of the atria. isl1 expression and lineage tracing of isl1-expressing progenitors demonstrate that Isl1 is a marker for a distinct population of undifferentiated cardiac progenitors that give rise to the cardiac segments missing in isl1 mutants. Isl1 function is required for these progenitors to contribute to the heart. In isl1 mutants, isl1-expressing progenitors are progressively reduced in number, and FGF and BMP growth factors are downregulated. Our studies define two sets of cardiogenic precursors, one of which expresses and requires Isl1 and the other of which does not. Our results have implications for the development of specific cardiac lineages, left-right asymmetry, cardiac evolution, and isolation of cardiac progenitor cells.