Heterozygous mutations in the human POU-homeobox TCF2 (vHNF1, HNF1) gene are associated with maturity-onset diabetes of the young, type 5, and abnormal urogenital tract development. Recently, pancreas atrophies have been reported in several maturity-onset diabetes of the young type 5 patients, suggesting that TCF2 is required not only for adult pancreas function but also for its normal development. Tcf2-deficient mice die before gastrulation because of defective visceral endoderm formation. To investigate the role of this factor in pancreas development, we rescued this early lethality by tetraploid aggregation. We show that TCF2 has an essential function in the first steps of pancreas development, correlated with its expression domain that demarcates the entire pancreatic buds from the earliest stages. Lack of TCF2 results in pancreas agenesis by embryonic day 13.5. At earlier stages, only a dorsal bud rudiment forms transiently and expresses the transcription factors Ipf1 and Hlxb9 but lacks the key transcription factor involved in the acquisition of a pancreatic fate, Ptf1a, as well as all endocrine precursor cells. Regional specification of the gut also is perturbed in Tcf2 ؊/؊ embryos as manifested by ectopic expression of Shh and lack of Ihh and Ipf1 in the posterior stomach and duodenum. Our results highlight the requirement of Tcf2 for ensuring both accurate expression of key regulator molecules in the stomach-duodenal epithelium and proper acquisition of the pancreatic fate. This study provides further insights into early molecular events controlling pancreas development and may contribute to the development of cell-replacement strategies for diabetes.diabetes MODY5 ͉ homeodomain transcription factor ͉ pancreas development ͉ gut regionalization ͉ tetraploid aggregation I n mammals, the pancreas emerges as ventral and dorsal evaginations from the foregut-midgut junction that subsequently fused to form a complex organ. The signaling molecule Sonic Hedgehog (SHH) demarcates a molecular boundary between the prepancreatic endoderm and adjacent stomach and duodenal anlagen and exerts an inhibitory action on pancreas development (1-3). Genetic studies in mice have identified a hierarchical regulatory network involved in pancreas morphogenesis, with significant and sequential differences between ventral and dorsal pancreas. In the mouse, the dorsal bud appears at embryonic day 9.5 (E9.5) concomitantly with the first differentiated glucagon-producing cells. The homeobox gene Ipf1(Pdx1) is expressed before and during this budding, and all pancreatic cell types derive from IPF1 ϩ progenitors (4, 5). However, in Ipf1-deficient mice, pancreas development is arrested after budding (6, 7), implying that other factors promote pancreas specification. Recently, the transcription factor Ptf1a (P48) has been shown to be essential for the acquisition of a pancreatic fate by undifferentiated ventral foregut endoderm, being required for the specification of the ventral pancreas and robust outgrowth of the dorsal bud. In its a...