The clinicopathologic features of a hitherto unrecognized cystic tumor of the pancreas are documented, and its possible relationship to a more common incidental microscopic lesion is analyzed. Six patients (3 men and 3 women) had undergone resection specifically for this cyst type. The mean age of the patients was 63 years (range 52 to 79 y) and the mean size of the tumors was 2.6 cm (median 1.5, range 0.8 to 9 cm). The cysts had variable lining ranging from attenuated, flat squamoid cells to transitional, to stratified squamous without keratinization (no granular layer). The cells forming the basal/parabasal region expressed p63 (transitional/squamous cell marker, not detected in any normal pancreas or nonsquamous neoplasia) and the surface cells were positive for MUC 1 and MUC 6 (markers present in intercalated duct cells), and negative for GLUT-1 (consistent marker of serous adenomas). The lesions appeared to be unilocular cystic dilatation of the ducts that typically contained distinctive muco-proteinaceous acidophilic acinar secretions forming concretions, confirming their communication with the acinar system, and suggesting a localized obstruction in their pathogenesis (a form of "retention" cyst). A thin fibrous wall devoid of any lymphoid tissue separated the cysts from unremarkable parenchyma. There was no evidence of pancreatitis (fibrosis or inflammation). Separately, 110 pancreata resected for various reasons were analyzed, and what seems to be microscopic/incidental version of this process was identified in 10 examples (8%). These microcysts were found lying within compact acinar tissue, and appeared to be transforming from intercalated ducts, some focally connected to acinar elements, and they had abortive (nonbridging) septae with pseudo-loculated appearance, irregular contours and often showed tightly packed clusters of ducts with similar morphology described in the cases underwent resection specifically for this cyst type. In conclusion, the distinctive morphologic, immunophenotypic, and clinical characteristics of this cystic lesion warrant its classification as a separate entity. We propose to refer to it as squamoid cyst of pancreatic ducts. It seems to be a metaplastic cystic transformation beginning in the intercalated ducts. Although obstructive etiology is suspected, a specific factor or surrogate evidence of obstruction such as chronic pancreatitis is typically lacking.