Coordination between adjacent tissues plays a crucial role during the morphogenesis of developing organs. In the embryonic heart, two tissues - the myocardium and the endocardium - are closely juxtaposed throughout their development. Myocardial and endocardial cells originate in neighboring regions of the lateral mesoderm, migrate medially in a synchronized fashion, collaborate to create concentric layers of the heart tube, and communicate during formation of the atrioventricular canal. Here, we identify a novel transmembrane protein, Tmem2, that has important functions during both myocardial and endocardial morphogenesis. We find that the zebrafish mutation frozen ventricle (frv) causes ectopic atrioventricular canal characteristics in the ventricular myocardium and endocardium, indicating a role of frv in the regional restriction of atrioventricular canal differentiation. Furthermore, in maternal-zygotic frv mutants, both myocardial and endocardial cells fail to move to the midline normally, indicating that frv facilitates cardiac fusion. Positional cloning reveals that the frv locus encodes Tmem2, a predicted type II single-pass transmembrane protein. Homologs of Tmem2 are present in all examined vertebrate genomes, but nothing is known about its molecular or cellular function in any context. By employing transgenes to drive tissue-specific expression of tmem2, we find that Tmem2 can function in the endocardium to repress atrioventricular differentiation within the ventricle. Additionally, Tmem2 can function in the myocardium to promote the medial movement of both myocardial and endocardial cells. Together, our data reveal that Tmem2 is an essential mediator of myocardium-endocardium coordination during cardiac morphogenesis.