The pancreatic islets of Langerhans regulate glucose homeostasis. The loss of insulin-producing β cells within islets results in diabetes, and islet transplantation from cadaveric donors can cure the disease. In vitro production of whole islets, not just β cells, will benefit from a better understanding of endocrine differentiation and islet morphogenesis. We used single-cell mRNA sequencing to obtain a detailed description of pancreatic islet development. Contrary to the prevailing dogma, we find islet morphology and endocrine differentiation to be directly related. As endocrine progenitors differentiate, they migrate in cohesion and form bud-like islet precursors, or "peninsulas" (literally "almost islands"). α cells, the first to develop, constitute the peninsular outer layer, and β cells form later, beneath them. This spatiotemporal collinearity leads to the typical core-mantle architecture of the mature, spherical islet. Finally, we induce peninsula-like structures in differentiating human embryonic stem cells, laying the ground for the generation of entire islets in vitro. Copyright © 2018 Elsevier Inc. All rights reserved.