Relatively little is known about the developmental signals that specify the types and numbers of pancreatic cells. Previous studies suggested that Notch signaling in the pancreas inhibits differentiation and promotes the maintenance of progenitor cells, but it remains unclear whether Notch also controls cell fate choices as it does in other tissues. To study the impact of Notch in progenitors of the beta cell lineage, we generated mice that express Cre-recombinase under control of the Pax4 promoter. Lineage analysis of Pax4(+) cells demonstrates they are specified endocrine progenitors that contribute equally to four islet cell fates, contrary to expectations raised by the dispensable role of Pax4 in the specification of the alpha and PP subtypes. In addition, we show that activation of Notch in Pax4(+) progenitors inhibits their differentiation into alpha and beta endocrine cells and shunts them instead toward a duct fate. These observations reveal an unappreciated degree of developmental plasticity among early endocrine progenitors and raise the possibility that a bipotent duct-endocrine progenitor exists during development. Furthermore, the redirection of Pax4(+) cells from alpha and beta endocrine fates toward a duct cell type suggests a positive role for Notch signaling in duct specification and is consistent with the more widely defined role for Notch in cell fate determination.