During pancreatic development, endocrine and exocrine cell types arise from common precursors in foregut endoderm. However, little information is available regarding regulation of pancreatic epithelial differentiation in specific precursor populations. We show that undifferentiated epithelial precursors in E10.5 mouse pancreas express nestin, an intermediate filament also expressed in neural stem cells. Within developing pancreatic epithelium, nestin is co-expressed with pdx1 and p48, but not ngn3. Epithelial nestin expression is extinguished upon differentiation of endocrine and exocrine cell types, and no nestin-positive epithelial cells are observed by E15.5. In E10.5 dorsal bud explants, activation of EGF signaling results in maintenance of undifferentiated nestin-positive precursors at the expense of differentiated acinar cells, suggesting a precursor/progeny relationship between these cell types. This relationship was confirmed by rigorous lineage tracing studies using nestin regulatory elements to drive Cre-mediated labeling of nestin-positive precursor cells and their progeny. These experiments demonstrate that a nestin promoter/enhancer element containing the second intron of the mouse nestin locus is active in undifferentiated E10.5 pancreatic epithelial cells, and that these nestin-positive precursors contribute to the generation of differentiated acinar cells. As in neural tissue, nestin-positive cells act as epithelial progenitors during pancreatic development, and may be regulated by EGF receptor activity.