Dorsal lips of Xenopus laevis may differentiate into pancreas after treatment with retinoic acid in vitro. The dorsal lip region is fated to be dorsal mesoderm and anterior endoderm. Dorsal lip cells isolated from stage 10 early gastrula differentiate into tissues such as notochord, muscle and pharynx. However, in the present study, dorsal lips treated with 10(-4) M retinoic acid for 3 h differentiated into pancreas-like structures accompanied by notochord and thick endodermal epithelium. Sections of the explants showed that some cells gathered and formed an acinus-like structure as observed under microscopes. In addition to the morphological changes, expressions of the pancreas-specific molecular markers, XIHbox8 and insulin, were induced in retinoic acid-treated dorsal lip explants. Therefore, it is suggested that retinoic acid may induce the dorsal lip cells to differentiate into a functional pancreas. However, continuous treatment with retinoic acid did not induce pancreas differentiation at any concentration. Dorsal lips treated with retinoic acid within 5 h after isolation differentiated into pancreas-like cells, while those treated after 15 h or more did not. The present study provided a suitable test system for analyzing pancreas differentiation in early vertebrate development.