The vertebrate endocrine pancreas has the crucial function of maintaining blood sugar homeostasis. This role is dependent upon the development and maintenance of pancreatic islets comprising appropriate ratios of hormone-producing cells. In all vertebrate models studied, an initial precursor population of Pdx1-expressing endoderm cells gives rise to separate endocrine and exocrine cell lineages. Within the endocrine progenitor pool a variety of transcription factors influence cell fate decisions, such that hormone-producing differentiated cell types ultimately arise, including the insulin-producing beta cells and the antagonistically acting glucagon-producing alpha cells. In previous work, we established that the development of all pancreatic lineages requires retinoic acid (RA) signaling. We have used the zebrafish to uncover genes that function downstream of RA signaling, and here we identify mnx1 (hb9) as an RA-regulated endoderm transcription factor-encoding gene. By combining manipulation of gene function, cell transplantation approaches and transgenic reporter analysis we establish that Mnx1 functions downstream of RA within the endoderm to control cell fate decisions in the endocrine pancreas progenitor lineage. We confirm that Mnx1-deficient zebrafish lack beta cells, and, importantly, we make the novel observation that they concomitantly gain alpha cells. In Mnx1-deficient embryos, precursor cells that are normally destined to differentiate as beta cells instead take on an alpha cell fate. Our findings suggest that Mnx1 functions to promote beta and suppress alpha cell fates.