During early stages of pancreatic development, the mesenchyme that contributes to the spleen overlies the dorsal pancreatic endoderm. Here, we show that interactions between splenic mesenchyme and pancreas proceed via a highly orchestrated morphogenetic program. Disruption of morphogenesis, as occurs in the Bapx1(Nkx3.2)(-/-) embryo, results in transformation of these tissues into well-organized, ectopic gut-like structures. Bapx1 plays a crucial organizing role effecting position and separation of the spleen and pancreas to prevent this metaplastic transformation. Similar transformations occur in organ cultures employing wild-type pancreatic endoderm and spleen mesenchyme, revealing the developmental plasticity of the pancreas and that precise spatial and temporal control of tissue interactions are required for development of both organs.