Genome-encoded microRNAs (miRNAs) provide a post-transcriptional regulatory layer that is important for pancreas development. However, how specific miRNAs are intertwined into the transcriptional network, which controls endocrine differentiation, is not well understood. Here, we show that microRNA-7 (miR-7) is specifically expressed in endocrine precursors and in mature endocrine cells. We further demonstrate that Pax6 is an important target of miR-7. miR-7 overexpression in developing pancreas explants or in transgenic mice led to Pax6 downregulation and inhibition of α- and β-cell differentiation, resembling the molecular changes caused by haploinsufficient expression of Pax6. Accordingly, miR-7 knockdown resulted in Pax6 upregulation and promoted α- and β-cell differentiation. Furthermore, Pax6 downregulation reversed the effect of miR-7 knockdown on insulin promoter activity. These data suggest a novel miR-7-based circuit that ensures precise control of endocrine cell differentiation.