P ancreatic cancer is almost invariably associated with mutations in the KRAS gene, most commonly KRAS^G12D, that result in a dominant-active form of the KRAS GTPase. However, how KRAS mutations promote pancreatic carcinogenesis is not fully understood, and whether oncogenic KRAS is required for the maintenance of pancreatic cancer has not been established. To address these questions, we generated two mouse models of pancreatic tumorigenesis: mice transgenic for inducible Kras^G12D, which allows for inducible, pancreas-specific, and reversible expression of the oncogenic Kras^G12D, with or without inactivation of one allele of the tumor suppressor gene p53. Here, we report that, early in tumorigenesis, induction of oncogenic Kras^G12D reversibly altered normal epithelial differentiation following tissue damage, leading to precancerous lesions. Inactivation of Kras^G12D in established precursor lesions and during progression to cancer led to regression of the lesions, indicating that Kras^G12D was required for tumor cell survival. Strikingly, during all stages of carcinogenesis, Kras^G12D upregulated Hedgehog signaling, inflammatory pathways, and several pathways known to mediate paracrine interactions between epithelial cells and their surrounding microenvironment, thus promoting formation and maintenance of the fibroinflammatory stroma that plays a pivotal role in pancreatic cancer. Our data establish that epithelial Kras^G12D influences multiple cell types to drive pancreatic tumorigenesis and is essential for tumor maintenance. They also strongly support the notion that inhibiting Kras^G12D, or its downstream effectors, could provide a new approach for the treatment of pancreatic cancer.