The pancreas, as most of the digestive tract, derives from the endoderm. Differentiation of these early gut endoderm cells into the endocrine cells forming the pancreatic islets of Langerhans depends on a cascade of gene activation events. These are controlled by different classes of transcription factors including the homeodomain, the basic helix-loop-helix (bHLH) and the winged helix proteins. Recently, considerable progress has been made delineating this cascade. The present review focuses on the role of the different transcription factors during pancreas development, with a particular emphasis on the newly identified bHLH transcription factor neurogenin3.