During organogenesis, the final size of mature cell populations depends on their rates of differentiation and expansion. Because transient expression of Neurogenin3 (Neurog3) in progenitor cells in the developing pancreas initiates their differentiation to mature islet cells, we examined the role of Neurog3 in cell cycle control during this process. We found that mitotically active pancreatic progenitor cells in mouse embryos exited the cell cycle after the initiation of Neurog3 expression. Transcriptome analysis demonstrated that the Neurog3-expressing cells dramatically up-regulated the mRNA encoding cyclin-dependent kinase inhibitor 1a (Cdkn1a). In Neurog3 null mice, the islet progenitor cells failed to activate Cdkn1a expression and continued to proliferate, showing that their exit from the cell cycle requires Neurog3. Furthermore, induced transgenic expression of Neurog3 in mouse β-cells in vivo markedly decreased their proliferation, increased Cdkn1a levels, and eventually caused profound hyperglycemia. In contrast, in Cdkn1a null mice, proliferation was incompletely suppressed in the Neurog3-expressing cells. These studies reveal a crucial role for Neurog3 in regulating the cell cycle during the differentiation of islet cells and demonstrate that the subsequent down-regulation of Neurog3 allows the mature islet cell population to expand.