Endothelial cells are required to initiate pancreas development from the endoderm. They also control the function of endocrine islets after birth. Here we investigate in developing pancreas how the endothelial cells become organized during branching morphogenesis and how their development affects pancreatic cell differentiation. We show that endothelial cells closely surround the epithelial bud at the onset of pancreas morphogenesis. During branching morphogenesis, the endothelial cells become preferentially located near the central (trunk) epithelial cells and remain at a distance from the branch tips where acinar cells differentiate. This correlates with predominant expression of the angiogenic factor vascular endothelial growth factor-A (VEGF-A) in trunk cells. In vivo ablation of VEGF-A expression by pancreas-specific inactivation of floxed Vegfa alleles results in reduced endothelial development and in excessive acinar differentiation. On the contrary, acinar differentiation is repressed when endothelial cells are recruited around tip cells that overexpress VEGF-A. Treatment of embryonic day 12.5 explants with VEGF-A or with VEGF receptor antagonists confirms that acinar development is tightly controlled by endothelial cells. We also provide evidence that endothelial cells repress the expression of Ptf1a, a transcription factor essential for acinar differentiation, and stimulate the expression of Hey-1 and Hey-2, two repressors of Ptf1a activity. In explants, we provide evidence that VEGF-A signaling is required, but not sufficient, to induce endocrine differentiation. In conclusion, our data suggest that, in developing pancreas, epithelial production of VEGF-A determines the spatial organization of endothelial cells which, in turn, limit acinar differentiation of the epithelium.