During development, progenitor expansion, lineage allocation, and implementation of differentiation programs need to be tightly coordinated so that different cell types are generated in the correct numbers for appropriate tissue size and function. Pancreatic dysfunction results in some of the most debilitating and fatal diseases, including pancreatic cancer and diabetes. Several transcription factors regulating pancreas lineage specification have been identified, and Notch signalling has been implicated in lineage allocation, but it remains unclear how these processes are coordinated. Using a combination of genetic approaches, organotypic cultures of embryonic pancreata, and genomics, we found that sphingosine-1-phosphate (S1p), signalling through the G protein coupled receptor (GPCR) S1pr2, plays a key role in pancreas development linking lineage allocation and specification. S1pr2 signalling promotes progenitor survival as well as acinar and endocrine specification. S1pr2-mediated stabilisation of the yes-associated protein (YAP) is essential for endocrine specification, thus linking a regulator of progenitor growth with specification. YAP stabilisation and endocrine cell specification rely on Gαi subunits, revealing an unexpected specificity of selected GPCR intracellular signalling components. Finally, we found that S1pr2 signalling posttranscriptionally attenuates Notch signalling levels, thus regulating lineage allocation. Both S1pr2-mediated YAP stabilisation and Notch attenuation are necessary for the specification of the endocrine lineage. These findings identify S1p signalling as a novel key pathway coordinating cell survival, lineage allocation, and specification and linking these processes by regulating YAP levels and Notch signalling. Understanding lineage allocation and specification in the pancreas will shed light in the origins of pancreatic diseases and may suggest novel therapeutic approaches.