The interconversion of cell lineages via transdifferentiation is an adaptive mode of tissue regeneration and an appealing therapeutic target. However, its clinical exploitation is contingent upon the discovery of contextual regulators of cell fate acquisition and maintenance. In murine models of diabetes, glucagon-secreting alpha cells transdifferentiate into insulin-secreting beta cells following targeted beta cell depletion, regenerating the form and function of the pancreatic islet. However, the molecular triggers of this mode of regeneration are unknown. Here, using lineage-tracing assays in a transgenic zebrafish model of beta cell ablation, we demonstrate conserved plasticity of alpha cells during islet regeneration. In addition, we show that glucagon expression is upregulated after injury. Through gene knockdown and rescue approaches, we also find that peptides derived from the glucagon gene are necessary for alpha-to-beta cell fate switching. Importantly, whereas beta cell neogenesis was stimulated by glucose, alpha-to-beta cell conversion was not, suggesting that transdifferentiation is not mediated by glucagon/GLP-1 control of hepatic glucose production. Overall, this study supports the hypothesis that alpha cells are an endogenous reservoir of potential new beta cells. It further reveals that glucagon plays an important role in maintaining endocrine cell homeostasis through feedback mechanisms that govern cell fate stability.