Normal heart function is critically dependent on the timing and coordination provided by a complex network of specialized cells: the cardiac conduction system. We have employed functional assays in zebrafish to explore early steps in the patterning of the conduction system that previously have been inaccessible. We demonstrate that a ring of atrioventricular conduction tissue develops at 40 hours post-fertilization in the zebrafish heart. Analysis of the mutant cloche reveals a requirement for endocardial signals in the formation of this tissue. The differentiation of these specialized cells, unlike that of adjacent endocardial cushions and valves, is not dependent on blood flow or cardiac contraction. Finally, both neuregulin and notch1b are necessary for the development of atrioventricular conduction tissue. These results are the first demonstration of the endocardial signals required for patterning central ;slow' conduction tissue, and they reveal the operation of distinct local endocardial-myocardial interactions within the developing heart tube.