Mutations in ZIC3 cause human X-linked heterotaxy and isolated cardiovascular malformations. A mouse model with targeted deletion of Zic3 demonstrates an early role for Zic3 in gastrulation, CNS, cardiac, and left-right axial development. The observation of multiple malformations in Zic3(null) mice and the relatively broad expression pattern of Zic3 suggest its important roles in multiple developmental processes. Here, we report that Zic3 is primarily required in epiblast derivatives to affect left-right patterning and its expression in epiblast is necessary for proper transcriptional control of embryonic cardiac development. However, cardiac malformations in Zic3 deficiency occur not because Zic3 is intrinsically required in the heart but rather because it functions early in the establishment of left-right body axis. In addition, we provide evidence supporting a role for Zic3 specifically in the perinodal region of the posterior lateral plate mesoderm (LPM) for the establishment of laterality. These data delineate the spatial requirement of Zic3 during left-right patterning in the mammalian embryo, and provide basis for further understanding the molecular mechanisms underlying the complex interaction of Zic3 with signaling pathways involved in the early establishment of laterality.