Despite our increasingly sophisticated understanding of transcriptional regulation in pancreas development, we know relatively little about the extrinsic signaling pathways involved in this process. We show here that the early pancreatic epithelium exhibits a specific enrichment in unphosphorylated beta-catenin protein, a hallmark of activation of the canonical Wnt signaling pathway. To determine if this pathway is functionally required for normal pancreas development, we have specifically deleted the beta-catenin gene in these cells. Pancreata developing without beta-catenin are hypoplastic, although their early progenitors appear normal and exhibit no premature differentiation or death. Surprisingly, and in marked contrast to its role in the intestine, loss of beta-catenin does not significantly perturb islet endocrine cell mass or function. The major defect of the beta-catenin-deficient pancreas is an almost complete lack of acinar cells, which normally comprise the majority of the organ. beta-Catenin appears to be cell-autonomously required for the specification of acinar cells, rather than for their survival or maintenance, as deletion of beta-catenin specifically in differentiated acinar cells has no effect. Thus, our data are consistent with a crucial role for canonical Wnt signals in acinar lineage specification and differentiation.