The anterior heart field (AHF) mediates formation of the outflow tract (OFT) and right ventricle (RV) during looping morphogenesis of the heart. Foxh1 is a forkhead DNA binding transcription factor in the TGFbeta-Smad pathway. Here we demonstrate that Foxh1(-/-) mutant mouse embryos form a primitive heart tube, but fail to form OFT and RV and display loss of outer curvature markers of the future working myocardium, similar to the phenotype of Mef2c(-/-) mutant hearts. Further, we show that Mef2c is a direct target of Foxh1, which physically and functionally interacts with Nkx2-5 to mediate strong Smad-dependent activation of a TGFbeta response element in the Mef2c gene. This element directs transgene expression to the presumptive AHF, as well as the RV and OFT, a pattern that closely parallels endogenous Mef2c expression in the heart. Thus, Foxh1 and Nkx2-5 functionally interact and are essential for development of the AHF and its derivatives, the RV and OFT, in response to TGFP-Iike signals.