TBX3 has long been known as a marker of liver development and mouse models carrying mutations in this gene display defects in liver specification. Previous studies from our laboratory showed that TBX3 promotes the differentiation of pancreatic over liver progenitors, suggesting that TBX3 normally acts to restrict pancreatic development. Furthermore, Loss of TBX3 was found to induce upregulation of a closely related family member, TBX2, suggesting potential compensation. To investigate this possibility, we also generated TBX2 and or TBX2/TBX3 compound null stem cell lines.  When generating stem cell-derived beta-like cells (sBC), we found that loss of TBX3 or TBX3/TBX2 decreased the proportion of polyhormonal cells. Examination of development in both control and mutant lines suggests that this may occur during pancreas specification as Glycoprotein 2, an important marker for mono-hormonal progenitors is upregulated in the mutants at the posterior foregut stage.  Furthermore, examination of published datasets reveals that both TBX2 and TBX3 are upregulated in human diabetic β-cells, suggesting that these genes may play a role in the diabetic beta-cell phenotype. Interestingly, genome wide gene expression analysis of sorted INS+ cells from TBX3 or TBX3/TBX2 mutant stem cell lines revealed an upregulation of stress pathways such as the unfolded protein response, hypoxia, and Interferon gamma pathway.  In addition, stimulation with inflammatory cytokines revealed that TBX3 mutant sBCs are more sensitive to inflammatory stress compared to wild type lines, suggesting a protective role of this gene. These data suggest that TBX factors play distinct roles in regulating pancreatic development and in the stress response in beta cells, with implications for enhancing the generation of mature pancreatic populations from human pluripotent stem cells.