Transforming growth factor-beta/bone morphogenetic protein (TGF-beta/BMP) signaling pathway is essential for embryonic and postnatal heart development and remodeling. The intracellular factor Smad4 plays a pivotal role in mediating TGF-beta/BMP signal transduction in the nucleus. To examine the function of Smad4 in embryonic cardiac development during mid-gestation, we specifically deleted the Smad4 gene in embryonic cardiomyocytes using the Cre-LoxP system. Deletion of Smad4 as early as E9.5, led to embryonic lethality between E12.5 and E15.5, and embryos exhibited severe morphological defects in the heart, including a thin compact layer, disorganized trabeculae, and ventricular septum defects (VSD). Smad4 deletion also led to a dramatic decrease in cardiomyocyte proliferation accompanied by downregulation of contractile protein-encoding genes such as alpha-myosin heavy chain, beta-myosin heavy chain, ventricular myosin light chain 2, and alpha-cardiac actin. In addition, deletion of Smad4 resulted in perturbation of TGF-beta/BMP ligand expression and signaling, and defects in expression of several cardiac transcription factor genes such as Nkx2.5, GATA4, and MEF2c. These results provide direct genetic evidences that Smad4 is essential for regulating cardiomyocyte proliferation and differentiation during murine cardiogenesis, and provides new insights into potential causes of congenital heart disease.