During embryonic development, precursor cells commit to specific cell fates in response to environmental cues through the establishment of lineage-specific gene expression programmes. Transcription factors are important downstream effectors of signalling pathways that initiate and maintain cell fate decisions. The haematopoietic transcription factor SCL (TAL-1) is an essential regulator of embryonic blood development. However, the exact stage at which SCL is required, its mechanisms of action, and its genomic targets are poorly understood. Characterising, jiow SCL functions - , during haematopoietic development will provide insights into how stern cells are specified. Using the embryonic stem cell/embryoid body (ES/EB) system to model early mouse development, we describe a critical role for SCL in mesoderm patterning. SCL is first expressed in PDGFRa+ FLK1+ mesoderm populations which contain lateral, paraxial and cardiac precursors. Through loss- and gain-of-function studies, we show that SCL drives lateral mesoderm specification and activates the haematopoietic programme in a direct DNA-binding independent manner, while actively repressing alternative mesodermal fates, specifically cardiac development, in a DNA-binding dependent manner. At a molecular level, we have identified direct genomic targets of SCL in Flk-1 + mesoderm populations. These include haematopoietic and cardiac transcription factors, cardiac-specific structural proteins, signalling proteins and general transcriptional repressors; thereby strengthening the dual function of SCL in mesoderm patterning. Finally, we have shown that the cardiac transcription factor GATA4 acts in a reciprocal manner, specifying cardiac precursors while repressing a lateral mesoderm fate. Collectively, this implicates SCL as a critical transcriptional regulator of cell fate decisions in early mesodermal precursors, employing distinct molecular mechanisms to impose a blood programme. Moreover, and extending earlier reports, we document the existence of an antagonistic cross-talk between haematopoietic and cardiac lineages during mesoderm patterning. In conclusion, this work offers a cellular and molecular platform to begin to dissect the network of genetic interactions involved in these developmental processes.