Canonical Notch signaling is thought to control the endocrine/exocrine decision in early pancreatic progenitors. Later, RBP-Jκ interacts with Ptf1a and E12 to promote acinar differentiation. To examine the involvement of Notch signaling in selecting specific endocrine lineages, we deregulated this pathway by targeted deletion of presenilin1 and presenilin2, the catalytic core of γ-secretase, in Ngn3- or Pax6-expressing endocrine progenitors. Surprisingly, whereas Pax6⁺ progenitors were irreversibly committed to the endocrine fate, we discovered that Ngn3⁺ progenitors were bipotential in vivo and in vitro. When presenilin amounts are limiting, Ngn3⁺ progenitors default to an acinar fate; subsequently, they expand rapidly to form the bulk of the exocrine pancreas. γ-Secretase inhibitors confirmed that enzymatic activity was required to block acinar fate selection by Ngn3 progenitors. Genetic interactions identified Notch2 as the substrate, and suggest that γ-secretase and Notch2 act in a noncanonical titration mechanism to sequester RBP-Jκ away from Ptf1a, thus securing selection of the endocrine fate by Ngn3 progenitors. These results revise the current view of pancreatic cell fate hierarchy, establish that Ngn3 is not in itself sufficient to commit cells to the endocrine fate in the presence of Ptf1a, reveal a noncanonical action for Notch2 protein in endocrine cell fate selection, and demonstrate that acquisition of an endocrine fate by Ngn3⁺ progenitors is γ-secretase-dependent until Pax6 expression begins.