Classic studies of dissected and recombined embryonic pancreas tissues published four decades ago suggested that epithelial–mesenchymal cell interactions regulate growth, epithelial branching, and cell differentiation in the embryonic pancreas (Golosow and Grobstein 1962; Wessells and Cohen 1967). Modern studies have revealed additional cell interactions, involving pancreatic epithelium and midline mesoderm-derived tissues, essential for normal pancreatic development (Kim et al. 1997a). Recently, many of the signaling pathways likely to govern cell interactions in the developing pancreas have been identified, allowing detailed studies of the genetic, molecular, and cellular basis of intercellular signaling that establishes proper pancreas development and function. These include the transforming growth factor-ß (TGF-ß), Notch, Hedgehog, fibroblast growth factor (FGF), and epidermal growth factor (EGF) pathways, and investigation of pancreas developmental biology demands familiarity with these signaling pathways. Descriptions of these pathways may be found in several recent reviews (Artavanis-Tsakonas et al. 1999; Hackel et al. 1999; Massagué and Chen 2000; Bailey et al. 2000; McMahon 2000; Zaret 2000). Our understanding of intercellular signals that regulate pancreatic development and function has advanced in the last several years. Knowledge about the role of transcription factors in pancreatic development, function, and disease has also rapidly advanced and has been recently reviewed (Sander and German 1997; Edlund 1998; Dohrmann et al. 2000). Here we emphasize findings that may elucidate mechanisms underlying human pancreatic exocrine and endocrine diseases, including congenital malformations and diabetes mellitus, and examine areas that need to be addressed to advance our understanding of pancreas development and function. We also discuss known or probable relationships between cell-extrinsic pancreatic signaling and transcriptional regulators of pancreatic gene expression. Additional literature may be found in several previous reviews (Slack 1995; Kim et al. 1997b; Gannon and Wright 1999; Yamaoka and Itakura 1999). References have been abridged here: for complete reference listings, annotated legends, and table, please see http://seungkimlab. stanford. edu.