The transcription factors Gli2 (glioma-associated factor 2), which is a transactivator of Sonic Hedgehog (Shh) signalling, and myocyte enhancer factor 2C (MEF2C) play important roles in the development of embryonic heart muscle and enhance cardiomyogenesis in stem cells. Although the physiological importance of Shh signalling and MEF2 factors in heart development is well known, the mechanistic understanding of their roles is unclear. Here, we demonstrate that Gli2 and MEF2C activated each other's expression while enhancing cardiomyogenesis in differentiating P19 EC cells. Furthermore, dominant-negative mutant proteins of either Gli2 or MEF2C repressed each other's expression, while impairing cardiomyogenesis in P19 EC cells. In addition, chromatin immunoprecipitation (ChIP) revealed association of Gli2 to the Mef2c gene, and of MEF2C to the Gli2 gene in differentiating P19 cells. Finally, co-immunoprecipitation studies showed that Gli2 and MEF2C proteins formed a complex, capable of synergizing on cardiomyogenesis-related promoters containing both Gli- and MEF2-binding elements. We propose a model whereby Gli2 and MEF2C bind each other's regulatory elements, activate each other's expression and form a protein complex that synergistically activates transcription, enhancing cardiac muscle development. This model links Shh signalling to MEF2C function during cardiomyogenesis and offers mechanistic insight into their in vivo functions.