Cardiomyogenesis proceeds in the presence of signals emanating from extra-embryonic lineages emerging before and during early eutherian gastrulation. In embryonic stem cell derived embryoid bodies, primitive endoderm gives rise to visceral and parietal endoderm. Parietal endoderm undergoes an epithelial to mesenchymal transition shortly before first cardiomyocytes start to contract rhythmically. Here, we demonstrate that Secreted Protein, Acidic, Rich in Cysteine, SPARC, predominantly secreted by mesenchymal parietal endoderm specifically promotes early myocardial cell differentiation in embryoid bodies. SPARC enhanced the expression of bmp2 and nkx2.5 in embryoid bodies and fetal cardiomyocytes. Inhibition of either SPARC or Bmp2 attenuated in both cases cardiomyogenesis and downregulated nkx2.5 expression. Thus, SPARC directly affects cardiomyogenesis, modulates Bmp2 signaling, and contributes to a positive autoregulatory loop of Bmp2 and Nkx2.5 in cardiomyocytes.