Abstract Pancreatic exocrine and endocrine lineages arise from multipotent pancreatic progenitor cells (MPCs). Exploiting the mechanisms that govern expansion and differentiation of these cells could enhance efforts to generate β-cells from stem cells. Although our prior work indicates that the canonical Wnt signaling component β-catenin is required qualitatively for exocrine acinar but not endocrine development, precisely how this requirement plays out at the level of MPCs and their lineage-restricted progeny is unknown. In addition, the contribution of β-catenin function to β-cell development remains controversial. To resolve the potential roles of β-catenin in development of MPCs and β-cells, we generated pancreas- and pre-endocrine-specific β-catenin knockout mice. Pancreas-specific loss of β-catenin produced not only a dramatic reduction in acinar cell numbers, but also a significant reduction in β-cell mass. The loss of β-cells is due not to a defect in the differentiation of endocrine precursors, but instead correlates with an early and specific loss of MPCs. In turn, this reflects a novel role for β-catenin in maintaining proximal–distal patterning of the early epithelium, such that distal MPCs resort to a proximal, endocrine-competent “trunk” fate when β-catenin is deleted. Moreover, β-catenin maintains proximal–distal patterning, in part, by inhibiting Notch signaling. Subsequently, β-catenin is required for proliferation of both distal and proximal cells, driving overall organ growth. In distinguishing two distinct roles for β-catenin along the route of β-cell development, we suggest that temporally appropriate positive and negative manipulation of this molecule could enhance expansion and differentiation of stem cell-derived MPCs.