We previously demonstrated that the initial emergence of endocardial precursor cells (endocardial angioblasts) occurred within the precardiac mesoderm and that the endodermal secretory products promoted delamination of cells from the precardiac mesoderm and expression of endothelial lineage markers [Dev. Biol. 175 (1996), 66]. In this study, we sought to extend our original study to the identification of candidate molecules derived from the endoderm that might have induced endocardial precursor cell formation. We have detected expression of transforming growth factors β (TGFβ) 2, 3, and 4 in anterior endoderm at Hamburger and Hamilton (H-H) stage 5 by RT-PCR. To address the role of growth factors known to be present in the endoderm, precardiac mesodermal explants were isolated from H-H stage 5 quail embryos and cultured on the surface of collagen gels with serum-free defined medium 199. Similar to the effect of explants cocultured with anterior endoderm, when cultured with TGFβs 1–3 (3 ng/ml each), explants formed QH-1 (anti-quail endothelial marker)-positive mesenchymal cells, which invaded the gel and expressed the extracellular marker, cytotactin (tenascin). Another member of the TGFβ superfamily, bone morphogenetic protein-2 (BMP-2; 100 ng/ml), did not induce QH-1-positive mesenchymal cell formation but promoted formation of an epithelial monolayer on the surface of the collagen gel; this monolayer did not express QH-1. Explants treated with vascular endothelial growth factor (VEGF₁₆₅, 100 ng/ml) also did not invade the gel but formed an epithelial-like outgrowth on the surface of the gel. However, this monolayer did express the QH-1 marker. Fibroblast growth factor-2 (FGF-2; 250 ng/ml)-treated explants expressed QH-1 and exhibited separation of the cells on the surface of the gel. Finally, a combination of TGFβs and VEGF enhanced formation of QH-1-positive cord-like structures within the gel from mesenchyme that had previously invaded the gel. Luminization of the cords, however, was not clearly evident. These findings suggest that TGFβs, among the growth factors tested, mediate the initial step of endocardial formation, i.e., delamination of endothelial precursor cells from precardiac mesoderm, whereas VEGF may primarily effect early vasculogenesis (cord-like structure formation).