The endocardium, the endothelial lining of the heart, plays complex and critical roles in heart development, particularly in the formation of the cardiac valves and septa, the division of the truncus arteriosus into the aortic and pulmonary trunks, the development of Purkinje fibers that form the cardiac conduction system, and the formation of trabecular myocardium. Current data suggest that the endocardium is a regionally specialized endothelium that arises through a process of de novo vasculogenesis from a distinct population of mesodermal cardiogenic precursors in the cardiac crescent. In this article, we review recent developments in the understanding of the embryonic origins of the endocardium. Specifically, we summarize vasculogenesis and specification of endothelial cells from mesodermal precursors, and we review the transcriptional pathways involved in these processes. We discuss the lineage relationships between the endocardium and other endothelial populations and between the endocardium and the myocardium. Finally, we explore unresolved questions about the lineage relationships between the endocardium and the myocardium. One of the central questions involves the timing with which mesodermal cells, which arise in the primitive streak and migrate to the cardiac crescent, become committed to an endocardial fate. Two competing conceptual models of endocardial specification have been proposed. In the first, mesodermal precursor cells in the cardiac crescent are prespecified to become either endocardial or myocardial cells, while in the second, fate plasticity is retained by bipotential cardiogenic cells in the cardiac crescent. We propose a third model that reconciles these two views and suggest future experiments that might resolve this question.