Distinct progenitor cell populations exist in cardiac mesoderm important for patterning of the heart. During heart tube formation in mouse, Tbx5 is expressed in progenitors located more laterally, whereas Isl1 and Fgf8 are expressed in progenitors located more medially. Signals that drive mesodermal progenitors into various cardiac lineages include Fgf8, which functions to induce Isl1. Studies in chick and zebrafish have shown that retinoic acid restricts the number of cardiac progenitors, but its role in mammalian cardiac development is unclear. Here, we demonstrate that Raldh2(-/-) mouse embryos lacking retinoic acid signaling exhibit a posterior expansion of the cardiac Fgf8 expression domain as well as an expansion of Isl1 expression into mesoderm lying posterior to the cardiac field. We provide evidence that retinoic acid acts specifically in the posterior-medial region of the cardiac field to establish the heart posterior boundary potentially by reducing Fgf8 expression which restricts the Isl1 domain.