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Acinar cells play an essential role in the secretory function of exocrine organs. Despite this requirement, how acinar cells are generated during organogenesis is unclear. Using the acini-ductal network of the developing human and murine salivary gland, we demonstrate an unexpected role for SOX2 and parasympathetic nerves in generating the acinar lineage that has broad implications for epithelial morphogenesis. Despite SOX2 being expressed by progenitors that give rise to both acinar and duct cells, genetic ablation of SOX2 results in a failure to establish acini but not ducts. Furthermore, we show that SOX2 targets acinar-specific genes and is essential for the survival of acinar but not ductal cells. Finally, we illustrate an unexpected and novel role for peripheral nerves in the creation of acini throughout development via regulation of SOX2. Thus, SOX2 is a master regulator of the acinar cell lineage essential to the establishment of a functional organ.