Liver duct paucity is characteristic of children born with Alagille Syndrome (ALGS), a disease associated with JAGGED1 mutations. Here, we report that zebrafish embryos with compound homozygous mutations in two Notch ligand genes, jagged1b (jag1b) and jagged2b (jag2b) exhibit a complete loss of canonical Notch activity and duct cells within the liver and exocrine pancreas, whereas hepatocyte and acinar pancreas development is not affected. Further, animal chimera studies demonstrate that wild-type endoderm cells within the liver and pancreas can rescue Notch activity and duct lineage specification in adjacent cells lacking jag1b and jag2b expression. We conclude that these two Notch ligands are directly and solely responsible for all duct lineage specification in these organs in zebrafish. Our study uncovers genes required for lineage specification of the intrahepatopancreatic duct cells, challenges the role of duct cells as progenitors, and suggests a genetic mechanism for ALGS ductal paucity.The hepatopancreatic duct cells connect liver hepatocytes and pancreatic acinar cells to the intestine, but the mechanism for their lineage specification is unclear. Here, the authors reveal that Notch ligands Jagged1b and Jagged2b induce duct cell lineage in the liver and pancreas of the zebrafish.