The basic helix–loop–helix transcription factor Neurog3 (Neurogenin3 or Ngn3) actively drives endodermal progenitor cells towards endocrine islet cell differentiation during embryogenesis. Here, we manipulate Neurog3 expression levels in endocrine progenitor cells without altering its expression pattern using heterozygosity and a hypomorph. Lowered Neurog3 gene dosage in the developing pancreatic epithelium reduces the overall production of endocrine islet cells without significantly affecting the proportions of various islet cell types that do form. A reduced Neurog3 production level in the endocrine-directed pancreatic progenitor population activates the expression of Neurog3 in an increased number of epithelial progenitors. Yet a significant number of these Neurog3⁺ cells detected in heterozygous and hypomorphic pancreata, possibly those that express low levels of Neurog3, move on to adopt pancreatic ductal or acinar fates. These data directly demonstrate that achieving high levels of Neurog3 expression is a critical step for endocrine commitment from multipotent pancreatic progenitors. These findings also suggest that a high level of Neurog3 expression could mediate lateral inhibition or other unknown feedback mechanisms to regulate the number of cells that initiate Neurog3 transcription and protein production. The control of Neurog3⁺ cell number and the Neurog3 threshold-dependent endocrine differentiation mechanism combine to select a specific proportion of pancreatic progenitor cells to adopt the islet cell fate.