Rationale: The proepicardial organ (PE) contributes to the cellular diversity of the developing heart by giving rise to the epicardium as well as vascular smooth muscle cells and fibroblasts. Despite the importance of these cells in cardiac development, function and regeneration, the signals required for the specification of the PE remain largely unexplored. Objective: We aim to identify the signaling molecules and transcription factors that regulate PE specification. Methods and Results: Here, we present the first genetic evidence that bone morphogenetic protein (Bmp) signaling in conjunction with the T-box transcription factor Tbx5a is essential for PE specification in zebrafish. Specifically, Bmp4 from the cardiac region, but not the liver bud, acting through the type I BMP receptor Acvr1l, is required for PE specification. By overexpressing a dominant-negative form of a Bmp receptor at various embryonic stages, we determined when Bmp signaling was required for PE specification. We also found that overexpression of bmp2b right before PE specification led to the ectopic expression of PE specific markers including tbx18. Furthermore, using loss-of-function approaches, we discovered a previously unappreciated PE specification role for Tbx5a at early somite stages; this role occurs earlier than, and appears to be independent from, the requirement for Bmp signaling in this process. Conclusion: Altogether, these data lead us to propose that Tbx5a confers anterior lateral plate mesodermal cells the competence to respond to Bmp signals and initiate PE development.