Lithium is a commonly used drug for the treatment of bipolar disorder. At high doses, lithium becomes teratogenic, which is a property that has allowed this agent to serve as a useful tool for dissecting molecular pathways that regulate embryogenesis. This study was designed to examine the impact of lithium on heart formation in the developing frog for insights into the molecular regulation of cardiac specification. Embryos were exposed to lithium at the beginning of gastrulation, which produced severe malformations of the anterior end of the embryo. Although previous reports characterized this deformity as a posteriorized phenotype, histological analysis revealed that the defects were more comprehensive, with disfigurement and disorganization of all interior tissues along the anterior‐posterior axis. Emerging tissues were poorly segregated and cavity formation was decreased within the embryo. Lithium exposure also completely ablated formation of the heart and prevented myocardial cell differentiation. Despite the complete absence of cardiac tissue in lithium treated embryos, exposure to lithium did not prevent myocardial differentiation of precardiac dorsal marginal zone explants. Moreover, precardiac tissue freed from the embryo subsequent to lithium treatment at gastrulation gave rise to cardiac tissue, as demonstrated by upregulation of cardiac gene expression, display of sarcomeric proteins, and formation of a contractile phenotype. Together these data indicate that lithium’s effect on the developing heart was not due to direct regulation of cardiac differentiation, but an indirect consequence of disrupted tissue organization within the embryo.