Understanding the tissue interactions that induce pancreatic progenitor cells from the embryonic endoderm provides insights into congenital malformations, tissue repair, and differentiating stem cells to a pancreatic fate. The specification of pancreatic progenitors within the dorsal endodermal epithelium has been thought to involve two phases of mesodermal interactions; first with the lateral plate mesoderm and notochord and then with aortic endothelial cells. Afterwards, branching morphogenesis of the pancreatic bud is induced by Isl-1-positive dorsal mesenchyme cells, whose growth is stimulated by factors in the circulation. Using mouse genetic models and embryo tissue explants, we show that the aortic endothelium and dorsal mesenchyme each possess an additional role in pancreatic induction, prior to the branching morphogenesis step. Specifically, we find that aortic endothelial cells promote the survival of nearby, Isl-1-positive dorsal mesenchyme, independently of factors from the circulation. Furthermore, we find that FGF10 signaling from the mesenchyme cells maintains Ptf1a expression in the dorsal pancreatic bud and appears genetically redundant with a role for the transcription factor gene HNF6 in promoting the induction of Pdx-1-positive dorsal endoderm. Together, these studies reveal a relay pathway from aortic endothelium to dorsal mesenchyme and then to the endoderm, along with functions of the dorsal mesenchyme that promote the initial differentiation of the dorsal pancreatic endoderm, prior to organ morphogenesis.