The mechanism of how organ shape emerges and specifies cell fate is not understood. Pancreatic duct and endocrine lineages arise in a spatially distinct domain from the acinar lineage. Whether these lineages are pre-determined or settle once these niches have been established remains unknown. Here, we reconcile these two apparently opposing models, demonstrating that pancreatic progenitors re-localize to establish the niche that will determine their ultimate fate. We identify a p120ctn-regulated mechanism for coordination of organ architecture and cellular fate mediated by differential E-cadherin based cell sorting. Reduced p120ctn expression is necessary and sufficient to re-localize a subset of progenitors to the peripheral tip domain, where they acquire an acinar fate. The same mechanism is used re-iteratively during endocrine specification, where it balances the choice between the alpha and beta cell fates. In conclusion, organ patterning is regulated by p120ctn-mediated cellular positioning, which precedes and determines pancreatic progenitor fate.