Pancreatic endocrine cells expand rapidly during embryogenesis by neogenesis and proliferation, but during adulthood, islet cells have a very slow turnover. Disruption of murine retinoblastoma tumor suppressor protein (Rb) in mature pancreatic β-cells has a limited effect on cell proliferation. Here we show that deletion of Rb during embryogenesis in islet progenitors leads to an increase in the neurogenin 3-expressing precursor cell population, which persists in the postnatal period and is associated with increased β-cell mass in adults. In contrast, Rb-deficient islet precursors, through repression of the cell fate factor aristaless related homeobox, result in decreased α-cell mass. The opposing effect on survival of Rb-deficient α- and β-cells was a result of opposing effects on p53 in these cell types. As a consequence, loss of Rb in islet precursors led to a reduced α- to β-cell ratio, leading to improved glucose homeostasis and protection against diabetes.