The sinoatrial node (SAN), functionally known as the pacemaker, regulates the cardiac rhythm or heartbeat. Several genes are expressed in the developing SAN and form a genetic network regulating the fate of the SAN cells. The short stature homeobox gene Shox2 is an important player in the SAN genetic network by regulating the expression of different cardiac conduction molecular markers including the early cardiac differentiation marker Nkx2.5. Here we report that the expression patterns of Shox2 and Nkx2.5 are mutually exclusive from the earliest stages of the venous pole and the SAN formation. We show that tissue specific ectopic expression of Shox2 in the developing mouse heart downregulates the expression of Nkx2.5 and causes cardiac malformations; however, it is not sufficient to induce a SAN cell fate switch in the working myocardium. On the other hand, tissue specific overexpression of Nkx2.5 in the heart leads to severe hypoplasia of the SAN and the venous valves, dis-regulation of the SAN genetic network, and change of the SAN cell fate into working myocardium, and causes embryonic lethality, recapitulating the phenotypes including bradycardia observed in Shox2-/- mutants. These results indicate that Nkx2.5 activity is detrimental to the normal formation of the SAN. Taken together, our results demonstrate that Shox2 downregulation of Nkx2.5 is essential for the proper development of the SAN and that Shox2 functions to shield the SAN from becoming working myocardium by acting upstream of Nkx2.5. © 2011 Elsevier Inc.