Pdx1 and Oc1 are co-expressed in multipotent pancreatic progenitors and regulate the pro-endocrine gene Neurog3. Their expression diverges in later organogenesis, with Oc1 absent from hormone+ cells and Pdx1 maintained in mature β cells. In a classical genetic test for cooperative functional interactions, we derived mice with combined Pdx1 and Oc1 heterozygosity. Endocrine development in double-heterozygous pancreata was normal at embryonic day (E)13.5, but defects in specification and differentiation were apparent at E15.5, the height of the second wave of differentiation. Pancreata from double heterozygotes showed alterations in the expression of genes crucial for β-cell development and function, decreased numbers and altered allocation of Neurog3-expressing endocrine progenitors, and defective endocrine differentiation. Defects in islet gene expression and β-cell function persisted in double heterozygous neonates. These results suggest that Oc1 and Pdx1 cooperate prior to their divergence, in pancreatic progenitors, to allow for proper differentiation and functional maturation of β cells.