Pancreatic islets are complex structures formed by five different hormoneexpressing cells surrounded by endothelial cells, nerves, and fibroblasts. Dysfunction of insulin-producing cells (β-cells) causes diabetes. Generation of β-like cells that can compensate the loss of β-cell mass in type 1 diabetes or defects in β-cell insulin secretion in type 2 diabetes is a current challenge in biomedicine. The knowledge of the molecular basis governing pancreas development and islet formation will help us to generate in vitro or in vivo β-like cells to treat diabetes. Pancreas development is a highly complicated process, which is regulated by signaling pathways, transcription factors, nutrients, and other environmental factors. Collectively, these signals and factors act coordinated, in a spatial and temporal manner, throughout the embryonic pancreas. In this review we will summarize the main steps in pancreas development and will highlight the key transcription factors that have been shown to play essential roles in pancreas specification, maintenance of multipotent pancreatic progenitors, endocrine differentiation, and islet maturation. We will also discuss the role of microRNAs (miRNAs) in regulating islet cell fate.