Heart development requires cardiomyocyte proliferation, coupled with morphogenic differentiation of the inner trabecular myocardium and the outer compact zone myocardium. In mouse embryos lacking the retinoic acid receptor RXRalpha, proliferation and morphogenesis of the compact zone fails. We demonstrated previously that epicardial cells, in response to retinoic acid, secrete an activity that promotes cell proliferation. In this study, we have investigated downstream signaling pathways that are elicited in response to this factor. We find that cells treated in culture activate PI3 kinase and Erk pathways, and that these are required for a proliferative response. In vivo, phosphorylation of Akt and GSK3beta (PI3K pathway) and of Erk1/2 and p90rsk (Erk pathway) is substantially reduced in RXRalpha-deficient heart tissue. Neuregulin, a mitogen secreted from the endocardium which promotes cardiomyocyte proliferation and trabecular differentiation, also activates proliferation via PI3K and Erk pathways. However, the epicardial factor is not neuregulin, and does not function via the neuregulin receptor. Gene markers known to be selectively expressed in trabecular or compact myocardium in vivo are differentially activated in cell culture by treatment with neuregulin or epicardial factor, and are misexpressed in RXRalpha(-/-) heart tissue. We therefore conclude that epicardial and endocardial signals converge on common proliferative components, but diverge in downstream pathways that lead to compact vs. trabecular morphogenic differentiation.