Epicardial signaling and Rxra are required for expansion of the ventricular myocardial compact zone. Here, we examine Raldh2(-/-) and Rxra(-/-) mouse embryos to investigate the role of retinoic acid (RA) signaling in this developmental process. The heart phenotypes of Raldh2 and Rxra mutants are very similar and are characterized by a prominent defect in ventricular compact zone growth. Although RA activity is completely lost in Raldh2(-/-) epicardium and the adjacent myocardium, RA activity is not lost in Rxra(-/-) hearts, suggesting that RA signaling in the epicardium/myocardium is not required for myocardial compact zone formation. We explored the possibility that RA-mediated target gene transcription in non-cardiac tissues is required for this process. We found that hepatic expression of erythropoietin (EPO), a secreted factor implicated in myocardial expansion, is dependent on both Raldh2 and Rxra. Chromatin immunoprecipitation studies support Epo as a direct target of RA signaling in embryonic liver. Treatment of an epicardial cell line with EPO, but not RA, upregulates Igf2. Furthermore, both Raldh2(-/-) and Rxra(-/-) hearts exhibit downregulation of Igf2 mRNA in the epicardium. EPO treatment of cultured Raldh2(-/-) hearts restores epicardial Igf2 expression and rescues ventricular cardiomyocyte proliferation. We propose a new model for the mechanism of RA-mediated myocardial expansion in which RA directly induces hepatic Epo resulting in activation of epicardial Igf2 that stimulates compact zone growth. This RA-EPO-IGF2 signaling axis coordinates liver hematopoiesis with heart development.