Inductive interactions between endodermal and mesodermal cells play a role in organogenesis, but the molecular nature of these interactions are unknown. Keiichi Katsumoto and Shoen Kume (p. 1947) now demonstrate that reciprocal signalling mediated by the chemokine ligand CXCL12 and its ligand CXCR4 can regulate pancreatic fate in chick embryos. The researchers show that, prior to blood vessel formation, angioblasts reside in close proximity to the somatic mesoderm and the gut endoderm, tissues from which pancreatic precursors arise. Importantly, they demonstrate that CXCL12 expressed in the gut endoderm functions to attract these angioblasts, which express its receptor CXCR4 and in turn signal back to the gut endoderm to induce pancreatic cell fate; ectopic expression of Cxcl12 attracted angioblasts and resulted in an expanded pancreatic bud, whereas a CXCR4 inhibitor prevented angioblast migration towards the gut endoderm and perturbed vessel formation. The authors propose that reciprocal CXCL12-CXCR4 signalling can spatiotemporally regulate angioblast migration and pancreas induction, shedding light on the early mechanisms that establish pancreatic fate.