Two distinct types of Flk-1(+) mesoderm, hemangiogenic and cardiogenic, are thought to contribute to blood, vessel, and cardiac cell lineages. However, our understanding of how Flk-1(+) mesoderm is specified is currently limited. In the present study, we investigated whether ER71, an Ets transcription factor essential for hematopoietic and endothelial cell lineage development, could modulate the hemangiogenic or cardiogenic outcome of the Flk-1(+) mesoderm. We show that Flk-1(+) mesoderm can be divided into Flk-1(+)PDGFRα(-) hemangiogenic and Flk-1(+)PDGFRα(+) cardiogenic mesoderm. ER71-deficient embryonic stem cells produced only the Flk-1(+)PDGFRα(+) cardiogenic mesoderm, which generated SMCs and cardiomyocytes. Enforced ER71 expression in the wild-type embryonic stem cells skewed toward the Flk-1(+)PDGFRα(-) mesoderm formation, which generated hematopoietic and endothelial cells. Whereas hematopoietic and endothelial cell genes were positively regulated by ER71, cardiac and Wnt signaling pathway genes were negatively regulated by ER71. We show that ER71 could inhibit Wnt signaling in VE-cadherin-independent as well as VE-cadherin-dependent VE-cadherin/β-catenin/Flk-1 complex formation. Enforced β-catenin could rescue cardiogenic mesoderm in the context of ER71 overexpression. In contrast, ER71-deficient Flk-1(+) mesoderm displayed enhanced Wnt signaling, which was reduced by ER71 re-introduction. We provide the molecular basis for the antagonistic relationship between hemangiogenic and cardiogenic mesoderm specification by ER71 and Wnt signaling.