The mammalian pancreas is densely innervated by both the sympathetic and parasympathetic nervous systems, which control exocrine and endocrine secretion. During embryonic development, neural crest cells migrating in a rostrocaudal direction populate the gut, giving rise to neural progenitor cells. Recent studies in mice have shown that neural crest cells enter the pancreatic epithelium at E11.5. However, the cues that guide the migration of neural progenitors into the pancreas are poorly defined. In this study we identify glial cell line-derived neurotrophic factor (GDNF) as a key player in this process. GDNF displays a dynamic expression pattern during embryonic development that parallels the chronology of migration and differentiation of neural crest derivatives in the pancreas. Conditional inactivation of Gdnf in the pancreatic epithelium results in a dramatic loss of neuronal and glial cells and in reduced parasympathetic innervation in the pancreas. Importantly, the innervation of other regions of the gut remains unaffected. Analysis of Gdnf mutant mouse embryos and ex vivo experiments indicate that GDNF produced in the pancreas acts as a neurotrophic factor for gut-resident neural progenitor cells. Our data further show that exogenous GDNF promotes the proliferation of pancreatic progenitor cells in organ culture. In summary, our results point to GDNF as crucial for the development of the intrinsic innervation of the pancreas.