The pancreas is a mixed exocrine and endocrine gland that controls many homeostatic functions. The exocrine pancreas produces and secretes digestive enzymes, whereas the endocrine compartment consists of four distinct hormone-producing cell types. Studies that further our knowledge of the basic mechanisms that underlie the formation of the pancreas will be crucial for understanding the development and homeostasis of this organ and of the mechanisms that cause diabetes. This information is also pivotal for any attempt to generate functional insulin-producing β-cells that are suitable for transplantation.