The generation of pancreas, liver, and intestine from a common pool of progenitors in the foregut endoderm requires the establishment of organ boundaries. How dorsal foregut progenitors activate pancreatic genes and evade the intestinal lineage choice remains unclear. Here, we identify Pdx1 and Sox9 as cooperative inducers of a gene regulatory network that distinguishes the pancreatic from the intestinal lineage. Genetic studies demonstrate dual and cooperative functions for Pdx1 and Sox9 in pancreatic lineage induction and repression of the intestinal lineage choice. Pdx1 and Sox9 bind to regulatory sequences near pancreatic and intestinal differentiation genes and jointly regulate their expression, revealing direct cooperative roles for Pdx1 and Sox9 in gene activation and repression. Our study identifies Pdx1 and Sox9 as important regulators of a transcription factor network that initiates pancreatic fate and sheds light on the gene regulatory circuitry that governs the development of distinct organs from multi-lineage-competent foregut progenitors.