In the context of a cellular therapy for diabetes, methods for pancreatic progenitor expansion and subsequent differentiation into insulin-producing beta cells would be extremely valuable. Here we establish three-dimensional culture conditions in Matrigel that enable the efficient expansion of dissociated mouse embryonic pancreatic progenitors. By manipulating the medium composition we generate either hollow spheres, which are mainly composed of pancreatic progenitors, or complex organoids that spontaneously undergo pancreatic morphogenesis and differentiation. The in vitro maintenance and expansion of pancreatic progenitors require active Notch and FGF signaling, thus recapitulating in vivo niche signaling interactions. Our experiments reveal new aspects of pancreas development, such as a community effect by which small groups of cells better maintain progenitor properties and expand more efficiently than isolated cells, as well as the requirement for three-dimensionality. Finally, growth conditions in chemically defined biomaterials pave the way for testing the biophysical and biochemical properties of the niche that sustains pancreatic progenitors.