•The pancreas develops from the embryonic foregut endoderm.•Pancreas organogenesis depends on interactions between endoderm-derived epithelial cells and mesenchymal cells.•The mesenchyme provides cues to support the survival and expansion of pancreatic progenitors and differentiated cells.•The main approaches used to study mesenchymal-epithelial interactions are explant cultures and transgenic mouse systems.•Mesenchymal cues promote the generation of insulin-producing cells from stem cells as a potential therapy for diabetes. Pancreas organogenesis depends on proper interactions of endoderm-derived epithelial cells, which will form the exocrine and endocrine cells of the adult organ, with their surrounding mesenchymal layer. Research on the role of pancreatic mesenchyme, pioneered by Golosow and Grobstein in the 1960’s, revealed these cells regulate multiple events during pancreas development. Still, much is unknown regards the molecular basis of epithelial-mesenchymal interactions in this process. Here, we review in vivo and ex vivo approaches to study mesenchymal requirements for mammal pancreas organogenesis, and how gained knowledge is being translated toward the development of cell replacement therapy for diabetes.