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Background & Aims: The exocrine portion of the pancreas functions in digestion and preserves pancreatic homeostasis. Learning how this tissue forms during embryogenesis could improve our understanding of human pancreatic diseases. Expression of the homeobox gene Prox1 in the exocrine pancreas changes throughout development in mice. We investigated the role of Prox1 in development of the exocrine pancreas in mice. Conclusions: Pancreas-specific deletion of Prox1 causes premature differentiation of acinar cells and poor elongation of epithelial branches; these defects indicate that Prox1 controls the expansion of tip progenitors in the early developing pancreas. During later stages of embryogenesis, Prox1 appears to regulate duct cell proliferation and morphogenesis. These findings identify Prox1 as an important regulator of pancreatic exocrine development. Methods: Mice with pancreas-specific deletion of Prox1 (Prox1ΔPanc) were generated and their pancreatic tissues were analyzed using immunohistochemistry, transmission electron microscopy, histologic techniques, quantitative real-time polymerase chain reaction, immunoblotting, and morphometric analysis. Results: Loss of Prox1 from the pancreas led to multiple exocrine alterations, most notably premature acinar cell differentiation, increased ductal cell proliferation, altered duct morphogenesis, and imbalanced expression of claudin proteins. Prox1ΔPanc mice also had some minor alterations in islet cells, but beta-cell development was not affected. The exocrine congenital defects of Prox1ΔPanc pancreata appeared to initiate a gradual process of deterioration that resulted in extensive loss of acinar cells, lipomatosis, and damage to ductal tissue in adult mice. Refereed/Peer-reviewed