Diverse sets of progenitors contribute to the development of the embryonic heart, but the mechanisms of their specification have remained elusive. Here, using a human pluripotent stem cell (hPSC) model, we deciphered cardiac and non-cardiac lineage trajectories in differentiation and identified transcription factors underpinning cell specification, identity and function. We discovered a concentration-dependent, fate determining function for the basic helix-loop-helix transcription factor HAND1 in mesodermal progenitors and uncovered its gene regulatory network. At low expression level, HAND1 directs differentiation towards multipotent juxta-cardiac field progenitors able to make cardiomyocytes and epicardial cells, whereas at high level it promotes the development of extraembryonic mesoderm. Importantly, HAND1-low progenitors can be propagated in their multipotent state. This detailed mechanistic insight into human development has the potential to accelerate the delivery of effective disease modelling, including for congenital heart disease, and cell therapy-based regenerative medicine.