Intercellular signal transduction pathways regulate the NK-2 family of transcription factors in a conserved gene regulatory network that directs cardiogenesis in both flies and mammals. The Drosophila NK-2 protein Tinman (Tin) was recently shown to regulate Stat92E, the Janus kinase (JAK) and Signal transducer and activator of transcription (Stat) pathway effector, in the developing mesoderm. To understand whether the JAK/Stat pathway also regulates cardiogenesis, we performed a systematic characterization of JAK/Stat signaling during mesoderm development. Drosophila embryos with mutations in the JAK/Stat ligand upd or in Stat92E have non-functional hearts with luminal defects and inappropriate cell aggregations. Using strong Stat92E lossof- function alleles, we show that the JAK/Stat pathway regulates tin expression prior to heart precursor cell diversification. tin expression can be subdivided into four phases and, in Stat92E mutant embryos, the broad phase 2 expression pattern in the dorsal mesoderm does not restrict to the constrained phase 3 pattern. These embryos also have an expanded pericardial cell domain. We show the E(spl)-C gene HLHm5 is expressed in a pattern complementary to tin during phase 3 and that this expression is JAK/Stat dependent. In addition, E(spl)-C mutant embryos phenocopy the cardiac defects of Stat92E embryos. Mechanistically, JAK/Stat signals activate E(spl)-C genes to restrict Tin expression and the subsequent expression of the T-box transcription factor H15 to direct heart precursor diversification. This study is the first to characterize a role for the JAK/Stat pathway during cardiogenesis and identifies an autoregulatory circuit in which tin limits its own expression domain.