Tbx1 has been implicated as a candidate gene responsible for defective pharyngeal arch remodeling in DiGeorge/Velocardiofacial syndrome. Tbx1(+/-) mice mimic aspects of the DiGeorge phenotype with variable penetrance, and null mice display severe pharyngeal hypoplasia. Here, we identify enhancer elements in the Tbx1 gene that are conserved through evolution and mediate tissue-specific expression. We describe the generation of transgenic mice that utilize these enhancer elements to direct Cre recombinase expression in endogenous Tbx1 expression domains. We use these Tbx1-Cre mice to fate map Tbx1-expressing precursors and identify broad regions of mesoderm, including early cardiac mesoderm, which are derived from Tbx1-expressing cells. We test the hypothesis that fibroblast growth factor 8 (Fgf8) functions downstream of Tbx1 by performing tissue-specific inactivation of Fgf8 using Tbx1-Cre mice. Resulting newborn mice display DiGeorge-like congenital cardiovascular defects that involve the outflow tract of the heart. Vascular smooth muscle differentiation in the great vessels is disrupted. This data is consistent with a model in which Tbx1 induces Fgf8 expression in the pharyngeal endoderm, which is subsequently required for normal cardiovascular morphogenesis and smooth muscle differentiation in the aorta and pulmonary artery.