Despite recent advances in delineating the mechanisms involved in cardiogenesis, cellular lineage specification remains incompletely understood. To explore the relationship between developmental fate and potential, we isolated a cardiac-specific Nkx2.5(+) cell population from the developing mouse embryo. The majority of these cells differentiated into cardiomyocytes and conduction system cells. Some, surprisingly, adopted a smooth muscle fate. To address the clonal origin of these lineages, we isolated Nkx2.5(+) cells from in vitro differentiated murine embryonic stem cells and found approximately 28% of these cells expressed c-kit. These c-kit(+) cells possessed the capacity for long-term in vitro expansion and differentiation into both cardiomyocytes and smooth muscle cells from a single cell. We confirmed these findings by isolating c-kit(+)Nkx2.5(+) cells from mouse embryos and demonstrated their capacity for bipotential differentiation in vivo. Taken together, these results support the existence of a common precursor for cardiovascular lineages in the mammalian heart.