Recent advances in generating pancreatic cell types from human pluripotent stem cells has depended on our knowledge of the developmental processes that regulate pancreas development in vivo. The developmental events between gastrulation and formation of the embryonic pancreatic primordia are both rapid and dynamic and studies in frog, fish, chick, and mouse have identified the molecular basis of how the pancreas develops from multipotent endoderm progenitors. Here, we review the current status of our understanding of molecular mechanisms that control endoderm formation, endoderm patterning, and pancreas specification and highlight how these discoveries have allowed for the development of robust methods to generate pancreatic cells from human pluripotent stem cells.