The epicardium is a mesothelial cell layer essential for vertebrate heart development and pertinent for cardiac repair post-injury in the adult. The epicardium initially forms from a dynamic precursor structure, the proepicardial organ, from which cells migrate onto the heart surface. During the initial stage of epicardial development crucial epicardial-derived cell lineages are thought to be determined. Here, we define an essential requirement for transcription factor Tcf21 during early stages of epicardial development in Xenopus, and show that depletion of Tcf21 results in a disruption in proepicardial cell specification and failure to form a mature epithelial epicardium. Using a mass spectrometry-based approach we defined Tcf21 interactions and established its association with proteins that function as transcriptional co-repressors. Furthermore, using an in vivo systems-based approach, we identified a panel of previously unreported proepicardial precursor genes that are persistently expressed in the epicardial layer upon Tcf21 depletion, thereby confirming a primary role for Tcf21 in the correct determination of the proepicardial lineage. Collectively, these studies lead us to propose that Tcf21 functions as a transcriptional repressor to regulate proepicardial cell specification and the correct formation of a mature epithelial epicardium.