Epigenetic modifications to DNA and its associated proteins affect cell plasticity and cell fate restrictions throughout embryonic development. Development of the vertebrate pancreas is characterized by an initial over-lapping expression of a set of transcriptional regulators in a defined region of the posterior foregut endoderm that collectively promote pancreas progenitor specification and proliferation. As development progresses, these transcription factors segregate into distinct pancreatic lineages, with some being maintained in specific subsets of terminally differentiated pancreas cell types throughout adulthood. Here we describe the progressive stages and cell fate restrictions that occur during pancreas development and the relevant known epigenetic regulatory events that drive the dynamic expression patterns of transcription factors that regulate pancreas development. In addition, we highlight how changes in epigenetic marks can affect susceptibility to pancreas diseases (such as diabetes), adult pancreas cell plasticity, and the ability to derive replacement insulin-producing β cells for the treatment of diabetes.