Taking tissue slices of the embryonic and newborn pancreas is a novel approach for the study of the perinatal development of this gland. The aim of this study was to describe the morphology and physiology of in vivo and in vitro developing beta-cells. In addition, we wanted to lay a foundation for the functional analysis of other pancreatic cells, either alone or as part of an integrative pancreatic physiology approach. We used cytochemistry and light microscopy to detect specific markers and the whole-cell patch-clamp to assess the function of single beta-cells. The insulin signal in the embryonic beta-cells was condensed to a subcellular compartment and redistributed throughout the cytosol during the first 2 days after birth. The hormone distribution correlated well with the development of membrane excitability and hormone release competence in beta-cells. Endocrine cells survived in the organotypic tissue culture and maintained their physiological properties for weeks. We conclude that our preparation fulfills the criteria for a method of choice to characterize the function of developing pancreas in wild-type and genetically modified mice that die at birth. We suggest organotypic culture for in vitro studies of the development and regeneration of beta-cells.