Continuous regeneration of digestive enzyme (zymogen)-secreting chief cells is a normal aspect of stomach function that is disrupted in precancerous lesions (e.g. metaplasias, chronic atrophy). The cellular and genetic pathways that underlie zymogenic cell (ZC) differentiation are poorly understood. Here,we describe a gene expression analysis of laser capture microdissection purified gastric cell populations that identified the bHLH transcription factor Mist1 as a potential ZC regulatory factor. Our molecular and ultrastructural analysis of proliferation, migration and differentiation of the gastric unit in Mist1^-/- and control mice supports a model whereby wild-type ZC progenitors arise as neck cells in the proliferative (isthmal) zone of the gastric unit and become transitional cells(TCs) with molecular and ultrastructural characteristics of both enzyme-secreting ZCs and mucus-secreting neck cells as they migrate to the neck-base zone interface. Thereafter, they rapidly differentiate into mature ZCs as they enter the base. By contrast, Mist1^-/- neck cells differentiate normally, but ZCs in the mature, basal portion of the gastric unit uniformly exhibit multiple apical cytoplasmic structural abnormalities. This defect in terminal ZC differentiation is also associated with markedly increased abundance of TCs, especially in late-stage TCs that predominantly have features of immature ZCs. Thus, we present an in vivo system for analysis of ZC differentiation, present molecular evidence that ZCs differentiate from neck cell progenitors and identify Mist1 as the first gene with a role in this clinically important process.