Improving generation of insulin-producing islets from human pluripotent stem cells (hPSCs) would enhance their clinical relevance for treating diabetes. Here, we demonstrate that cytoskeletal state at the onset of differentiation is critical for definitive endoderm formation. Depolymerizing F-actin with latrunculin A (latA) during the first 24 hours of differentiation facilitates rapid exit from pluripotency and alters Activin/Nodal, BMP, JNK-JUN, and WNT pathway signaling dynamics during definitive endoderm formation. These signaling changes influence downstream patterning of the gut tube, leading to improved pancreatic progenitor identity and decreased expression of markers for other endodermal lineages. Continued differentiation generates islets containing a higher percentage of β cells that exhibit improved maturation, insulin secretion, and ability to reverse hyperglycemia. Furthermore, this latA treatment reduces enterochromaffin cells in the final cell population and corrects differentiations from hPSC lines that otherwise fail to consistently produce pancreatic islets, highlighting the importance of cytoskeletal signaling during differentiation onset.