We have isolated and characterized a novel zebrafish pancreas mutant. Mutant embryos lack expression of isl1 and sst in the endocrine pancreas, but retain isl1 expression in the CNS. Non-endocrine endodermal gene expression is less affected in the mutant, with varying degrees of residual expression observed for pdx1, carbA, hhex, prox1, sid4, transferrin and ifabp. In addition, mutant embryos display a swollen pericardium and lack fin buds. Genetic mapping revealed a mutation resulting in a glycine to arginine change in the catalytic domain of the aldh1a2 gene, which is required for the production of retinoic acid from vitamin A. Comparison of our mutant (aldh1a2(um22)) to neckless (aldh1a2(i26)), a previously identified aldh1a2 mutant, revealed similarities in residual endodermal gene expression. In contrast, treatment with DEAB (diethylaminobenzaldehyde), a competitive reversible inhibitor of Aldh enzymes, produces a more severe phenotype with complete loss of endodermal gene expression, indicating that a source of Aldh activity persists in both mutants. We find that mRNA from the aldh1a2(um22) mutant allele is inactive, indicating that it represents a null allele. Instead, the residual Aldh activity is likely due to maternal aldh1a2, since we find that translation-blocking, but not splice-blocking, aldh1a2 morpholinos produce a phenotype similar to DEAB treatment. We conclude that Aldh1a2 is the primary Aldh acting during pancreas development and that maternal Aldh1a2 activity persists in aldh1a2(um22) and aldh1a2(i26) mutant embryos.