Epicardial derivatives, including vascular smooth muscle cells and cardiac fibroblasts, are crucial for proper development of the coronary vasculature and cardiac fibrous matrix, both of which support myocardial integrity and function in the normal heart. Epicardial formation, epithelial-to-mesenchymal transition (EMT), and epicardium-derived cell (EPDC) differentiation are precisely regulated by complex interactions among signaling molecules and transcription factors. Here we review the roles of critical transcription factors that are required for specific aspects of epicardial development, EMT, and EPDC lineage specification in development and disease. Epicardial cells and subepicardial EPDCs express transcription factors including Wt1, Tcf21, Tbx18, and Nfatc1. As EPDCs invade the myocardium, epicardial progenitor transcription factors such as Wt1 are downregulated. EPDC differentiation into SMC and fibroblast lineages is precisely regulated by a complex network of transcription factors, including Tcf21 and Tbx18. These and other transcription factors also regulate epicardial EMT, EPDC invasion, and lineage maturation. In addition, there is increasing evidence that epicardial transcription factors are reactivated with adult cardiac ischemic injury. Determining the function of reactivated epicardial cells in myocardial infarction and fibrosis may improve our understanding of the pathogenesis of heart disease.