All pancreatic cell types derive from the same endodermal dorsal and ventral anlage that grow together to form the definitive pancreas. A number of distinct transcription factors operating at various levels of pancreatic development, and in different cell-types, have been identified and their functions have, in many cases, been genetically analyzed. This knowledge has given us useful information both on pancreas development and on various pancreatic disorders, such as diabetes. However, the extrinsic factors that ultimately control the process leading from the primitive gut endoderm to a fully developed, functional pancreas needs now to be identified. With such information, the prospect of using pancreatic stem and/or progenitor cells as a therapeutic approach towards curing diabetic disorders will be within reach.