For approximately 30-35 years, our insight into some of the fundamental aspects of pancreas development has been based mainly on two independent studies performed in the 1960s by Golosow and Grobstein and Wessells and Cohen. By performing classical embryological experiments, these two reports described the morphogenesis of the pancreas and the epitheliomesenchymal interactions that are required for proper pancreas development. In the 1970s, the groups of LeDourain and associates and Rutter and associates showed, importantly, that despite their similarities with neurons, the pancreatic endocrine cells, like the exocrine and ductual cells, were of an endodermal origin. Then during the 1980s, studies pioneered by Rutter, but also performed by many other groups, were focused on the transcriptional regulation of endocrine and exocrine genes. This eventually lead to the cloning of various transcription factors. By using a genetic approach to study the function of these transcription factors, new insights into pancreas development have now emerged that, on a molecular level, are beginning to explain some of the earlier observations. This review discusses our current knowledge of the mechanisms by which the various pancreatic cell types are generated.