OBJECTIVE Despite their origins in different germ layers, pancreatic islet cells share many common developmental features with neurons, especially serotonin-producing neurons in the hindbrain. Therefore, we tested whether these developmental parallels have functional consequences. RESEARCH DESIGN AND METHODS We used transcriptional profiling, immunohistochemistry, DNA-binding analyses, and mouse genetic models to assess the expression and function of key serotonergic genes in the pancreas. RESULTS We found that islet cells expressed the genes encoding all of the products necessary for synthesizing, packaging, and secreting serotonin, including both isoforms of the serotonin synthetic enzyme tryptophan hydroxylase and the archetypal serotonergic transcription factor Pet1. As in serotonergic neurons, Pet1 expression in islets required homeodomain transcription factor Nkx2.2 but not Nkx6.1. In β-cells, Pet1 bound to the serotonergic genes but also to a conserved insulin gene regulatory element. Mice lacking Pet1 displayed reduced insulin production and secretion and impaired glucose tolerance. CONCLUSIONS These studies demonstrate that a common transcriptional cascade drives the differentiation of β-cells and serotonergic neurons and imparts the shared ability to produce serotonin. The interrelated biology of these two cell types has important implications for the pathology and treatment of diabetes.