The intracellular protein p120 catenin aids in maintenance of cell-cell adhesion by regulating E-cadherin stability in epithelial cells. In an effort to understand the biology of p120 catenin in pancreas development, we ablated p120 catenin in mouse pancreatic progenitor cells, which resulted in deletion of p120 catenin in all epithelial lineages of the developing mouse pancreas: islet, acinar, centroacinar, and ductal. Loss of p120 catenin resulted in formation of dilated epithelial tubules, expansion of ductal epithelia, loss of acinar cells, and the induction of pancreatic inflammation. Aberrant branching morphogenesis and tubulogenesis were also observed. Throughout development, the phenotype became more severe, ultimately resulting in an abnormal pancreas comprised primarily of duct-like epithelium expressing early progenitor markers. In pancreatic tissue lacking p120 catenin, overall epithelial architecture remained intact; however, actin cytoskeleton organization was disrupted, an observation associated with increased cytoplasmic PKCζ. Although we observed reduced expression of adherens junction proteins E-cadherin, β-catenin, and α-catenin, p120 catenin family members p0071, ARVCF, and δ-catenin remained present at cell membranes in homozygous p120(f/f) pancreases, potentially providing stability for maintenance of epithelial integrity during development. Adult mice homozygous for deletion of p120 catenin displayed dilated main pancreatic ducts, chronic pancreatitis, acinar to ductal metaplasia (ADM), and mucinous metaplasia that resembles PanIN1a. Taken together, our data demonstrate an essential role for p120 catenin in pancreas development.