The cardiac conduction system is a complex network of cells that together orchestrate the rhythmic and coordinated depolarization of the heart. Dysfunction of the cardiac conduction system plays a central role in the pathogenesis of arrhythmia. While much progress has been made understanding cardiomyocyte differentiation, the molecular mechanisms regulating the specification and patterning of cells that form this conductive network is largely unknown. The LIM-homeodomain transcription factor ISL1 is highly expressed in the secondary heart field (SHF) progenitor population that makes a substantial contribution to the developing heart, comprising most cells in the right ventricle, both atria and pacemaker cells. Pacemaker cells comprise the most proximal component of the cardiac conduction system, which have been proposed as the source of most arrhythmogenic events. Their dominance on other spontaneous beating cell types makes them a suitable target for pharmacologic compounds, making access to this cell lineage necessary for the study of new therapeutic agents. To identify the signaling pathways that control the differentiation of human embryonic stem cell (hESC)-derived SHF cells into pacemaker cells, we performed RNA sequencing to compare the hESC-derived ISL1 + population, non-enriched population and undifferentiated hESCs. Furthermore, using a small molecule screen we identified compounds that can improve differentiation of hESCs toward pacemaker cells. Pathway analysis identified the Wnt pathway as the most significant regulator of SHF specification. Further differentiation of human pluripotent stem cells by stage-specific activation of BMP and WNT signaling pathways resulted in phenotypic pacemaker cells, which display morphological characteristics. More than 80% of these cells stained positively for HCN4, Contactin2(CNTN2) and GATA6, key markers of pacemaker cells. The differentiated cells express pacemaker markers, including CNTN2, TBX2, TBX3, HCN4, TBX18, GATA6 indicated by qRT-PCR. They show inward potassium currents through HCN channels in patch clamp experiments. Our data provides a new strategy to obtain human cardiac conduction cells in large scale for disease modeling, drug screening and cell therapy.