Organ progenitors arise within organ fields, embryonic territories that are larger than the regions required for organ formation. Little is known about the regulatory pathways that define organ field boundaries and thereby limit organ size. Here we identify a mechanism for restricting heart size through confinement of the developmental potential of the heart field. Via fate mapping in zebrafish, we locate cardiac progenitors within hand2-expressing mesoderm and demonstrate that hand2 potentiates cardiac differentiation within this region. Beyond the rostral boundary of hand2 expression, we find progenitors of vessel and blood lineages. In embryos deficient in vessel and blood specification, rostral mesoderm undergoes a fate transformation and generates ectopic cardiomyocytes. Therefore, induction of vessel and blood specification represses cardiac specification and delimits the capacity of the heart field. This regulatory relationship between cardiovascular pathways suggests strategies for directing progenitor cell differentiation to facilitate cardiac regeneration.