During embryogenesis, epithelial organization is the prerequisite for organogenesis, in particular, for establishing the tubular structure. Recent studies provided hints about epithelial formation in early heart development, which has not been systemically explored. Here, we revealed a gradient of HAND2 protein in cardiac progenitors in the anterior dorsal pericardial wall (aDPW) and adjacent transition zone (TZ) in the outflow tract (OFT). Deletion of Hand2 caused cell arrest and accumulation in the TZ, leading to defective morphogenesis. Although apicobasal cell polarity was unaffected, the key epithelial elements of adherens junction and cell-matrix adhesion were disrupted in the TZ of Hand2 mutant mice, indicating poorly formed epithelium. RNA-seq analysis revealed altered regulation of the contractile fiber and actin cytoskeleton, which affected cardiomyocyte differentiation. Furthermore, we have identified Stars as being transcriptionally controlled by HAND2. STARS facilitates actin polymerization that is essential for anchoring the adhesive molecules to create cell adhesion. Thus, we have uncovered a new function of HAND2 in mediating epithelial maintenance and integrity in OFT morphogenesis. In addition, this study also provides insights for understanding cardiac progenitor contribution to OFT development. © 2019. Published by The Company of Biologists Ltd.