The pancreas is comprised of exocrine and endocrine compartments releasing digestive enzymes into the duodenum and regulating blood glucose levels by insulin and glucagon release. Tissue homeostasis is depending on transcription factor networks, involving Ptf1α, Ngn3, Nkx6.1, and Sox9, which are already activated during organogenesis. However, proper organ function is challenged by diets of high sugar and fat content, increasing the risk of type 2 diabetes and other disorders. A detailed understanding of processes that are important for homeostasis and are impaired during type 2 diabetes is lacking. Here, we show that Zeb1—a transcription factor known for its pivotal role in epithelial-mesenchymal transition, cell plasticity, and metastasis in cancer—is expressed at low levels in epithelial cells of the pancreas and is crucial for organogenesis and pancreas function. Loss of Zeb1 in these cells result in an increase of islet mass, impaired glucose tolerance, and sensitizes to develop liver and pancreas steatosis during diabetes and obesity. Interestingly, moderate overexpression of Zeb1 results in severe pancreas agenesis and lethality after birth, due to islet insufficiency and lack of acinar structures. We show that Zeb1 induction interferes with proper differentiation, cell survival, and proliferation during pancreas formation, due to deregulated expression of endocrine-specific transcription factors. In summary, our analysis suggests a novel role of Zeb1 for homeostasis in epithelial cells that is indispensable for pancreas morphogenesis and proper organ function involving a tight regulation of Zeb1 expression.