Objective To explore the morphological relationship of the pulmonary endoderm with the primary heart field (PHF), the second heart field (SHF) and the heart outflow tract during early development of mouse embryonic heart. Methods Serial sections of three mouse embryos each day from embryonic day(ED) 7.5 to embryonic day(ED) 13 were stained immunohistochemically or immunofluorescently with antibodies against insulin gene enhancer binding protein (Islet-1，ISL-1), myosin heavy chain (MHC),α-smooth muscle actin (α-SMA), Nkx2.5 and proliferating cell nuclear antigen (PCNA). Results At ED7.5, ISL-1 positive cells in the cardiogenic plate were continuous with that of the developing SHF. From ED10 to ED13, ISL-1 positive pulmonary endoderm cells showed strong proliferation, irregular arrangement, loss the polarity with apparent intercellular space and changed to mesenchyme-like cells without obvious border with surrounding ISL-1 positive mesenchyme. Local proliferation of endoderm cells adjacent closely to the dorsal wall of aortic sac resulted in the formation of solid endoderm cord that extended towards aortic sac. Ventral to the foregut, ISL-1 positive mesenchyme cells surrounding the pulmonary endoderm and endoderm cord formed a distinctive cone-shaped structure. Conclusion PHF and SHF is a continuum and ISL-1 is an early marker for cardiac precursor cells in both structures. Pulmonary endoderm cells and the endoderm cord might play roles in inducing proliferation of ISL-1 positive cells or might transform to mesenchymal cells via epithelium-mesenchyme transition to maintain certain cell density of S