Metal ion‐containing macromolecules have fundamental roles in essentially all biological processes throughout the evolutionary tree. For example, iron‐containing heme is a cofactor in enzyme catalysis and electron transfer and an essential hemoglobin constituent. To meet the intense demand for hemoglobin assembly in red blood cells, the cell type‐specific factor GATA‐1 activates transcription of Alas2, encoding the rate‐limiting enzyme in heme biosynthesis, 5‐aminolevulinic acid synthase‐2 (ALAS‐2). Using genetic editing to unravel mechanisms governing heme biosynthesis, we discovered a GATA factor‐ and heme‐dependent circuit that establishes the erythroid cell transcriptome. CRISPR/Cas9‐mediated ablation of two Alas2 intronic cis elements strongly reduces GATA‐1‐induced Alas2 transcription, heme biosynthesis, and surprisingly, GATA‐1 regulation of other vital constituents of the erythroid cell transcriptome. Bypassing ALAS‐2 function in Alas2 cis element‐mutant cells by providing its catalytic product 5‐aminolevulinic acid rescues heme biosynthesis and the GATA‐1‐dependent genetic network. Heme amplifies GATA‐1 function by downregulating the heme‐sensing transcriptional repressor Bach1 and via a Bach1‐insensitive mechanism. Through this dual mechanism, heme and a master regulator collaborate to orchestrate a cell type‐specific transcriptional program that promotes cellular differentiation.