Vascular and haematopoietic cells organize into specialized tissues during early embryogenesis to supply essential nutrients to all organs and thus play critical roles in development and disease. At the top of the haemato-vascular specification cascade lies cloche, a gene that when mutated in zebrafish leads to the striking phenotype of loss of most endothelial and haematopoietic cells and a significant increase in cardiomyocyte numbers. Although this mutant has been analysed extensively to investigate mesoderm diversification and differentiation and continues to be broadly used as a unique avascular model, the isolation of the cloche gene has been challenging due to its telomeric location. Here we used a deletion allele of cloche to identify several new cloche candidate genes within this genomic region, and systematically genome-edited each candidate. Through this comprehensive interrogation, we succeeded in isolating the cloche gene and discovered that it encodes a PAS-domain-containing bHLH transcription factor, and that it is expressed in a highly specific spatiotemporal pattern starting during late gastrulation. Gain-of-function experiments show that it can potently induce endothelial gene expression. Epistasis experiments reveal that it functions upstream of etv2 and tal1, the earliest expressed endothelial and haematopoietic transcription factor genes identified to date. A mammalian cloche orthologue can also rescue blood vessel formation in zebrafish cloche mutants, indicating a highly conserved role in vertebrate vasculogenesis and haematopoiesis. The identification of this master regulator of endothelial and haematopoietic fate enhances our understanding of early mesoderm diversification and may lead to improved protocols for the generation of endothelial and haematopoietic cells in vivo and in vitro.