Mutations in Hes1, a target gene of the Notch signalling pathway, lead to ectopic pancreas by a poorly described mechanism. Here, we use genetic inactivation of Hes1 combined with lineage tracing and live imaging to reveal an endodermal requirement for Hes1, and show that ectopic pancreas tissue is derived from the dorsal pancreas primordium. RNA-seq analysis of sorted E10.5 Hes1(+/+) and Hes1(-/-) Pdx1-GFP(+) cells suggested that upregulation of endocrine lineage genes in Hes1(-/-) embryos was the major defect and, accordingly, early pancreas morphogenesis was normalized, and the ectopic pancreas phenotype suppressed, in Hes1(-/-)Neurog3(-/-) embryos. In Mib1 mutants, we found a near total depletion of dorsal progenitors, which was replaced by an anterior Gcg(+) extension. Together, our results demonstrate that aberrant morphogenesis is the cause of ectopic pancreas and that a part of the endocrine differentiation program is mechanistically involved in the dysgenesis. Our results suggest that the ratio of endocrine lineage to progenitor cells is important for morphogenesis and that a strong endocrinogenic phenotype without complete progenitor depletion, as seen in Hes1 mutants, provokes an extreme dysgenesis that causes ectopic pancreas.