Despite the pivotal role of the pancreas in hormonally-regulated pathways in the body, e.g. glucose homeostasis, the genetic mechanisms defining it have for many years remained largely enigmatic. After years out of the spotlight, pancreas development has once again come to centre stage. To a large extent, this is due to recent advances made through the detailed analysis of transgenic mice which have been engineered to carry mutations in specific developmental control genes. This review specifically focuses on the specification of the endocrine pancreas lineage and in particular on the role of the developmental control genes Pax4 and Pax6 in the generation of specific endocrine cell types. The comparison of various phenotypes of different mouse mutants affecting endocrine development supports a model in which Pax4 and Pax6 are required for the differentiation of certain endocrine cell lineages and implies a potential for acting at different levels of endocrine development.