Pancreas development requires precise control and large-scale interplay of the epigenome. However, the epigenetic mechanisms of specific epigenetic chromatin-modifying enzymes in pancreatic lineage specification still remain largely elusive. Here we show that the ten-eleven translocation (TET) methylcytosine dioxygenases which lead to DNA demethylation through catalyzing from 5-methylcytosine (5mC) to 5-hydroxymethylcytosine (5hmC), are crucial for pancreatic endocrine differentiation. Genetic disruption of all three TET enzymes in human embryonic stem cells (hESCs) inhibited the formation of pancreatic beta cells. We further found that deposition of both poised and active enhancer marks (H3K4me1 and H3K27ac) at the cis-regulatory elements of key pancreatic transcription factors, such as NKX6-1, PDX1, and PAX4, were significantly reduced in TET1/2/3 triple knockout (TKO) hESC-derived pancreatic endoderm progenitors (PE). Focusing on the enhancer regions of PAX4, we observed DNA hypermethylation, reduction of chromatin accessibility, and loss of H3K27ac, which correlated with the failure induction of PAX4 during pancreatic differentiation in TKO cells. Moreover, a moderated increase of 5mC enrichment was observed in TET1-knockout PE cells. ChIP-seq analyses of TET1 showed conserved occupancy of TET1 at the enhancer regions of PAX4 in both hESCs and PE, indicating TET1 facilitated an open chromatin stage at the PAX4 enhancer. Together, our findings imply that TET-mediated DNA demethylation is associated with the establishment of active enhancers and assessable chromatin to allow the binding of transcriptional regulators, thereby facilitating the specification of pancreatic endocrine lineage.