Abstract: HNF1A is a key transcription factor for pancreatic islet development regulating cell identity and function. HNF1A mutations lead to drastic changes in islet architecture, beta-cell dysfunction and MODY diabetes (maturity onset diabetes of the young). While intensively studied in pancreatic progenitors, HNF1A role in earlier human development remains surprisingly underexplored. To investigate this, we differentiated hiPSC bearing a “hot-spot” HNF1A mutation toward definitive endoderm and posterior foregut. At the posterior foregut stage, HNF1A-mutant cells exhibited a significant pancreas-to-intestine cell fate switch. Interestingly, this shift was associated with the deregulation of the Hedgehog signaling identified at protein and transcriptional level. Of note, these observations finally provide a causal explanation for the increased intestine length observed by us and others in mouse models with HNF1A mutation. The in-depth investigation of HNF1A impact during early development (endoderm, primitive gut tube, posterior foregut) also indicated that, at all stages, the HNF1A-mutant cells consistently displayed a shift toward mesodermal cell fate, marked by upregulation of key mesodermal markers. This mesodermal bias aligns with a predisposition for kidney lineage development, consistent with the idiopathic renal phenotypes observed in HNF1A-MODY patients, such as renal cysts and reduced renal function, further demonstrating a wider than expected developmental impact of the HNF1A mutation. These findings provide novel insights into the key role of HNF1A in regulating early lineage decisions and its interaction with the Hedgehog pathway. This work essentially advances our understanding of HNF1A mutations and their broader developmental effects, suggesting a more complex relationship between developmental signaling and disease beyond pancreatic islet dysfunction. Moreover, our observation reconciles the presence of multiple organ phenotypes observed in vivo in HNF1A mutant mice, which were generally underexplored and considered of idiopathic origin.