Background: Protein arginine methyltransferase 1 (PRMT1) is a major enzyme responsible for the formation of methylarginine in mammalian cells. Recent studies have revealed that PRMT1 plays important roles in the development of various tissues. However, its role in pancreas development has not yet been elucidated. Methods: Pancreatic progenitor cell-specific Prmt1 knock-out (Prmt1 PKO) mice were generated and characterized for their metabolic and histological phenotypes and their levels of Neurog3 gene expression and neurogenin 3 (NGN3) protein expression. Protein degradation assays were performed in mPAC cells. Results: Prmt1 PKO mice showed growth retardation and a severely diabetic phenotype. The pancreatic size and beta-cell mass were significantly reduced in Prmt1 PKO mice. Proliferation of progenitor cells during the secondary transition was decreased and endocrine cell differentiation was impaired. These defects in pancreas development could be attributed to the sustained expression of NGN3 in progenitor cells. Protein degradation assays in mPAC cells revealed that PRMT1 was required for the rapid degradation of NGN3. Conclusion: PRMT1 critically contributes to pancreas development by destabilizing the NGN3 protein.