Cardiac malformations due to aberrant development of the atrioventricular (AV) valves are among the most common forms of congenital heart disease. At localized swellings of extracellular matrix known as the endocardial cushions, the endothelial lining of the heart undergoes an epithelial to mesenchymal transition (EMT) to form mesenchymal progenitors of the AV valves. Further growth and differentiation of these mesenchymal precursors results in formation of portions of the atrial and ventricular septae, and generation of thin, pliable valves. The transcription factor Gata4 is expressed in the endothelium and mesenchyme of the AV valves. Using a Tie2-Cre transgene, we selectively inactivated Gata4 within endothelial-derived cells. Mutant endothelium failed to undergo EMT, resulting in hypocellular cushions. Mutant cushions had decreased levels of Erbb3, an EGF-family receptor essential for EMT in the atrioventricular cushions. In Gata4 mutant embryos, Erbb3 downregulation was associated with impaired activation of Erk, which is also required for EMT. Expression of a Gata4 mutant protein defective in interaction with Friend of Gata (FOG) cofactors rescued the EMT defect, but resulted in decreased proliferation of mesenchyme and hypoplastic cushions that failed to septate the ventricular inlet. We demonstrate two novel functions of Gata4 in development of the AV valves. First, Gata4 functions as an upstream regulator of an Erbb3-Erk pathway necessary for EMT, and second, Gata4 acts to promote cushion mesenchyme growth and remodeling.