The early embryonic pancreas gives rise to exocrine (ducts and acini) and endocrine lineages. Control of exocrine differentiation is poorly understood, but may be a critical avenue through which to manipulate pancreatic ductal carcinoma. Retinoids have been shown to change the character of pancreatic ductal cancer cells to a less malignant phenotype. We have shown that 9-cis retinoic acid (9cRA) inhibits acinar differentiation in the developing pancreas, in favor of ducts, and we wanted to determine the role of retinoids in duct versus acinar differentiation.We used multiple culture systems for the 11-day embryonic mouse pancreas.Retinoic acid receptor (RAR)-selective agonists mimicked the acinar suppressive effect of 9cRA, suggesting that RAR-RXR heterodimers were critical to ductal differentiation. RARalpha was only expressed in mesenchyme, whereas RXRalpha was expressed in epithelium and mesenchyme. Retinaldehyde dehydrogenase 2, a critical enzyme in retinoid synthesis, was expressed only in pancreatic epithelium. 9cRA did not induce ductal differentiation in the absence of mesenchyme, implicating a requirement for mesenchyme in 9cRA effects. Mesenchymal laminin is necessary for duct differentiation, and retinoids are known to enhance laminin expression. In 9cRA-treated pancreas, immunohistochemistry for laminin showed a strong band of staining around ducts, and blockage of laminin signaling blocked all 9cRA effects. Western blot and RT-PCR of pancreatic mesenchyme showed laminin-beta1 protein and mRNA induction by 9cRA.Retinoids regulate exocrine lineage selection through epithelial-mesenchymal interactions, mediated through up-regulation of mesenchymal laminin-1.