Type I diabetes results from the autoimmune-mediated destruction of pancreatic beta (β) cells, which regulate blood sugar levels by secretion of insulin. Recent clinical data suggest that the disease could be cured if an adequate supply of new β-cells were available, and one goal of pancreatic developmental biology is to understand how endogenous β-cells are made, with the hope of making them exogenously. Much is now known about the transcriptional regulation of pancreatic organ specification, growth, and lineage allocation; less is known about intercellular signals that regulate this process, but candidates continue to emerge. Additional insights, often contradicting older models, have come from the application of new lineage-tracing techniques. Altogether, these studies also shed light on the still-elusive pancreatic stem cell, which may participate in normal organ maintenance as well as recovery from injury. A rigorous proof of the existence of such a cell, whether in vivo or in vitro, would offer real hope for the prospect of controlled β-cell generation in a clinical setting.