Pancreas development begins with the formation of buds at specific sites in the embryonic foregut endoderm. We used recombination-based lineage tracing in vivo to show that Ptf1a (also known as PTF1-p48) is expressed at these early stages in the progenitors of pancreatic ducts, exocrine and endocrine cells, rather than being an exocrine-specific gene as previously described. Moreover, inactivation of Ptf1a switches the character of pancreatic progenitors such that their progeny proliferate in and adopt the normal fates of duodenal epithelium, including its stem-cell compartment. Consistent with the proposal that Ptf1a supports the specification of precursors of all three pancreatic cell types, transgene-based expression of Pdx1, a gene essential to pancreas formation, from Ptf1a cis-regulatory sequences restores pancreas tissue to Pdx1-null mice that otherwise lack mature exocrine and endocrine cells because of an early arrest in organogenesis. These experiments provide evidence that Ptf1a expression is specifically connected to the acquisition of pancreatic fate by undifferentiated foregut endoderm.