In the pituitary, the transition from proliferating progenitor cell into differentiated hormone producing cell is carefully regulated in a time-dependent and spatially-restricted manner. We report that two targets of Notch signaling, Hes1 and Prop1, are needed to maintain progenitors within Rathke's pouch and for the restriction of differentiated cells to the ventral pituitary. We observed ACTH and alphaGSU producing cells that had prematurely differentiated within Rathke's pouch along with correlated ectopic expression of Mash1 only when both Prop1 and Hes1 were lost. We also discovered that downregulation of N-cadherin expression in cells as they transition from Rathke's pouch to the anterior lobe appears to be essential for their movement. In the Prop1 mutant, cells are trapped in Rathke's pouch and N-cadherin expression remains high. Also, Slug, a marker of epithelial-to-mesenchymal transition, is absent in the dorsal anterior lobe. When Hes1 is lost in the Prop1 mutant, N-cadherin is downregulated and cells are able to exit Rathke's pouch but have lost their migrational cues and form ectopic foci surrounding Rathke's pouch. Our data reveal important overlapping functions of Hes1 and Prop1 in cell differentiation and movement that are critical for pituitary organogenesis.