Identification of endogenous signals that regulate expansion and maturation of organ-specific progenitor cells is a major goal in studies of organ development. Here we provide evidence that growth differentiation factor 11 (GDF11), a member of the TGF-beta ligand family, governs the number and maturation of islet progenitor cells in mouse pancreas development. Gdf11 is expressed in embryonic pancreatic epithelium during formation of islet progenitor cells that express neurogenin 3. Mice deficient for Gdf11 harbor increased numbers of NGN3+ cells, revealing that GDF11 negatively regulates production of islet progenitor cells. Despite a marked expansion of these NGN3+ islet progenitors, mice lacking Gdf11 have reduced beta-cell numbers and evidence of arrested beta-cell development, indicating that GDF11 is also required for beta-cell maturation. Similar precursor and islet cell phenotypes are observed in mice deficient for SMAD2, an intracellular signaling factor activated by TGF-beta signals. Our data suggest that Gdf11 and Smad2 regulate islet cell differentiation in parallel to the Notch pathway, which previously has been shown to control development of NGN3+ cells. Thus, our studies reveal mechanisms by which GDF11 regulates the production and maturation of islet progenitor cells in pancreas development.