Cystic neoplasms of the pancreas are increasingly recognized due to the expanding use and improved sensitivity of cross-sectional abdominal imaging. Major advances in the last decade have led to an improved understanding of the various types of cystic lesions and their biologic behavior. Despite significant improvements in imaging technology and the advent of endoscopic-ultrasound (EUS)-guided fine-needle aspiration, the diagnosis and management of pancreatic cystic lesions remains a significant clinical challenge. The first diagnostic step is to differentiate between pancreatic pseudocyst and cystic neoplasm. If a pseudocyst has been effectively excluded, the cornerstone issue is then to determine the malignant potential of the pancreatic cystic neoplasm. In the majority of cases, the correct diagnosis and successful management is based not on a single test but on incorporating data from various sources including patient history, radiologic studies, endoscopic evaluation, and cyst fluid analysis. This review will focus on describing the various types of cystic neoplasms of the pancreas, their malignant potential, and will provide the clinician with a comprehensive diagnostic approach.