Prolactin (PRL) and placental lactogens stimulate β-cell replication and insulin production in pancreatic islets and insulinoma cells through binding to the PRL receptor (PRLR). However, the contribution of PRLR signaling to β-cell ontogeny and function in perinatal life and the effects of the lactogens on adaptive islet growth are poorly understood. We provide evidence that expansion of β-cell mass during both embryogenesis and the postnatal period is impaired in the PRLR−/−mouse model. PRLR−/−newborns display a 30% reduction of β-cell mass, consistent with reduced proliferation index at E18.5. PRL stimulates leucine incorporation and S6 kinase phosphorylation in INS-1 cells, supporting a role for β-cell mTOR signaling in PRL action. Interestingly, a defect in the development of acini is also observed in absence of PRLR signaling, with a sharp decline in cellular size in both endocrine and exocrine compartments. Of note, a decrease in levels of IGF-II, a PRL target, in the Goto-Kakizaki (GK) rat, a spontaneous model of type 2 diabetes, is associated with a lack of PRL-mediated β-cell proliferation in embryonic pancreatic buds. Reduced pancreatic IGF-II expression in both rat and mouse models suggests that this factor may constitute a molecular link between PRL signaling and cell ontogenesis. Together, these results provide evidence that PRL signaling is essential for pancreas ontogenesis during the critical perinatal window responsible for establishing functional β-cell reserve.