Isl1 is a LIM/homeodomain transcription factor with critical roles for the development of the heart, the nervous system and the pancreas. Both deficiency and mis-expression of Isl1 cause profound developmental defects, demonstrating the importance of proper regulation of Isl1 gene expression during development. In order to understand the mechanisms that control Isl1 expression during embryogenesis and in tissue differentiation, we initiated a screen for gene regulatory elements in the Isl1 locus using a novel dual reporter gene vector that allows screens of large genomic regions through reporter gene assays in vitro and in vivo. We identified regions from the Isl1 gene locus that confer transcriptional activity in pancreatic cell lines in vitro. Using transgenic mice, we furthermore discovered an enhancer with in vivo specificity for the developing heart, as well as visceral and posterior mesoderm. Our findings further suggest that Foxo1 as well as Gata4 contribute to the activity of this enhancer in the developing embryo. We conclude that Isl1 gene expression is controlled in modular fashion by several elements with distinct functionality. Embryonic Isl1 expression in several tissues of mesodermal origin is driven by a specific enhancer that is located 3-6kb downstream of the gene.