The bHLH transcription factor Hand1 (Heart and neural crest-derived transcript-1) has a fundamental role in cardiovascular development; however, the molecular mechanisms have not been elucidated. In this paper we identify Thymosin β4 (Tβ4/Tmsb4x), which encodes an actin monomer-binding protein implicated in cell migration and angiogenesis, as a direct target of Hand1. We demonstrate that Hand1 binds an upstream regulatory region proximal to the promoter of Tβ4 at consensus Thing1 and E-Box sites and identify both activation and repression of Tβ4 by Hand1, through direct binding within either non-canonical or canonical E-boxes, providing new insight into gene regulation by bHLH transcription factors. Hand1-mediated activation of Tβ4 is essential for yolk sac vasculogenesis and embryonic survival, and administration of synthetic TB4 partially rescues yolk sac capillary plexus formation in Hand1-null embryos. Thus, we identify an in vivo downstream target of Hand1 and reveal impaired yolk sac vasculogenesis as a primary cause of early embryonic lethality following loss of this critical bHLH factor.