Prolactin (PRL) and placental lactogens stimulate beta cell replication and insulin production in pancreatic islets and insulinoma cells through binding to the PRL receptor (PRLR). However, the contribution of PRLR signaling to beta cell ontogeny and function in perinatal life and the effects of the lactogens on adaptive islet growth are poorly understood. We provide evidence that expansion of beta cell mass during both embryogenesis and the postnatal period is impaired in the PRLR-/- mouse model. PRLR-/- newborns display a 30% reduction of beta cell mass, consistent with reduced proliferation index at E18.5. PRL stimulates leucine incorporation and S6 kinase phosphorylation in INS-1 cells, supporting a role for beta cell mTOR signaling in PRL action. Interestingly, a defect in the development of acini is also observed in absence of PRLR signaling, with a sharp decline in cellular size in both endocrine and exocrine compartments. Of note, a decrease in levels of IGF-2, a PRL target, in the Goto-Kakizaki (GK) rat, a spontaneous model of type 2 diabetes, is associated with lack of PRL-mediated beta cell proliferation in embryonic pancreatic buds. Reduced pancreatic IGF2 expression in both rat and mouse models suggests that this factor may constitute a molecular link between PRL signaling and cell ontogenesis. Together, these results provide evidence that PRL signaling is essential for pancreas ontogenesis during the critical perinatal window responsible for establishing functional beta cell reserve.