BACKGROUND & AIMS: 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. METHODS: We used multiple culture systems for the 11-day embryonic mouse pancreas. RESULTS: 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. CONCLUSIONS: Retinoids regulate exocrine lineage selection through epithelial-mesenchymal interactions, mediated through up-regulation of mesenchymal laminin-1.