The pancreas is a mixed gland that contains endocrine and exocrine components. Within the pancreatic islets, beta cells produce insulin and control the glycemia. Their deficiency leads to diabetes and several potential complications. In the last decade, numerous studies have focused on pancreas development. The objective was to characterize the cellular and molecular factors that control the differentiation of endocrine and exocrine cell types. Investigation of the role of transcription factors by using genetic approaches led to the discovery of key molecules that are expressed both in rodents and humans. Some of them are ubiquitous, and some others are specifically involved in endocrine or exocrine specification. In addition to these intrinsic factors, recent studies have focused on the role of environmental factors. In the present review, we describe the roles of nutrients and oxygen in the embryonic pancreas. Interestingly, these extrinsic parameters can interfere with beta-cell differentiation and function. Altogether, these data should help to generate beta cells in vitro and define strategies for a cell-based therapy of type 1 diabetes.