Er71 mutant embryos are nonviable and lack hematopoietic and endothelial lineages. To further define the functional role for ER71 in cell lineage decisions, we generated genetically modified mouse models. We engineered an Er71-EYFP transgenic mouse model by fusing the 3.9 kb Er71 promoter to the EYFP reporter gene. Using FACS and transcriptional profiling, we examined the EYFP(+) population of cells in Er71 mutant and wild-type littermates. In the absence of ER71, we observed an increase in the number of EYFP-expressing cells, increased expression of the cardiac molecular program and decreased expression of the hemato-endothelial program, as compared with wild-type littermate controls. We also generated a novel Er71-Cre transgenic mouse model using the same 3.9 kb Er71 promoter. Genetic fate-mapping studies revealed that the ER71-expressing cells give rise to the hematopoietic and endothelial lineages in the wild-type background. In the absence of ER71, these cell populations contributed to alternative mesodermal lineages, including the cardiac lineage. To extend these analyses, we used an inducible embryonic stem/embryoid body system and observed that ER71 overexpression repressed cardiogenesis. Together, these studies identify ER71 as a critical regulator of mesodermal fate decisions that acts to specify the hematopoietic and endothelial lineages at the expense of cardiac lineages. This enhances our understanding of the mechanisms that govern mesodermal fate decisions early during embryogenesis.