The basic helix-loop-helix (bHLH) family of transcription factors orchestrates cell-fate specification, commitment and differentiation in multiple cell lineages during development. Here, we describe the role of a bHLH transcription factor, Tcf21 (epicardin/Pod1/capsulin), in specification of the cardiac fibroblast lineage. In the developing heart, the epicardium constitutes the primary source of progenitor cells that form two cell lineages: coronary vascular smooth muscle cells (cVSMCs) and cardiac fibroblasts. Currently, there is a debate regarding whether the specification of these lineages occurs early in the formation of the epicardium or later after the cells have entered the myocardium. Lineage tracing using a tamoxifen-inducible Cre expressed from the Tcf21 locus demonstrated that the majority of Tcf21-expressing epicardial cells are committed to the cardiac fibroblast lineage prior to initiation of epicardial epithelial-to-mesenchymal transition (EMT). Furthermore, Tcf21 null hearts fail to form cardiac fibroblasts, and lineage tracing of the null cells showed their inability to undergo EMT. This is the first report of a transcription factor essential for the development of cardiac fibroblasts. We demonstrate a unique role for Tcf21 in multipotent epicardial progenitors, prior to the process of EMT that is essential for cardiac fibroblast development.