Vertebrate heart development is initiated from bilateral lateral plate mesoderm that expresses the Nkx2.5 and GATA4 transcription factors, but the extracellular signals specifying heart precursor gene expression are not known. We describe here that the secreted signaling factor Fgf8 is expressed in and required for development of the zebrafish heart precursors, particularly during initiation of cardiac gene expression. fgf8 is mutated in acerebellar (ace) mutants, and homozygous mutant embryos do not establish normal circulation, although vessel formation is only mildly affected. In contrast, heart development, in particular of the ventricle, is severely abnormal in acerebellar mutants. Several findings argue that Fgf8 has a direct function in development of cardiac precursor cells: fgf8 is expressed in cardiac precursors and later in the heart ventricle. Fgf8 is required for the earliest stages of nkx2.5 and gata4, but not gata6, expression in cardiac precursors. Cardiac gene expression is restored in acerebellar mutant embryos by injecting fgf8 RNA, or by implanting a Fgf8-coated bead into the heart primordium. Pharmacological inhibition of Fgf signalling during formation of the heart primordium phenocopies the acerebellar heart phenotype, confirming that Fgf signaling is required independently of earlier functions during gastrulation. These findings show that fgf8/acerebellar is required for induction and patterning of myocardial precursors.