To clarify the lineage relationship between cells that express the neural stem cell marker nestin and endocrine cells of the pancreas, we analyzed offspring of a cross between mice carrying a nestin promoter/enhancer-driven cre-recombinase (Nestin-cre) and C57BL/6J-Gtrosa26(tm1Sor) mice that carry a loxP-disrupted beta-galactosidase gene (Rosa26). In nestin-cre(+/tg);R26R(loxP/+) embryos, cre-recombinase was detected in association with nestin-positive cells in the pancreatic mesenchyme with some of the nestin-positive cells lining vascular channels. In postnatal mice, pancreatic beta-galactosidase expression was restricted to vascular endothelial cells of the islet and a subset of cells in the muscularis of arteries in a distribution identical to endogenous nestin expression. Ex vivo explants of mouse pancreatic ducts grew dense cultures that costained for nestin and beta-galactosidase, demonstrating recombination in vitro. The cultures could be differentiated into complex stereotypic structures that contain nestin- and insulin-expressing cells. Nestin-cre(+/tg);R26R(loxP/+)-derived duct cultures showed that insulin-positive cells were negative for beta-galactosidase. These results indicate that both in vivo and in vitro pancreatic endocrine cells arise independently of nestin-positive precursors. The apparent vascular nature of the nestin-positive cell population and the close association with endocrine cells suggest that nestin-positive cells play an important role in the growth and maintenance of the islet.