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Nestin, a marker of neural stem cells, is also expressed by cells located in the epithelium of the pancreatic primordium and by a subpopulation of exocrine cells but not by endocrine cells. These findings raised the possibility that the pancreatic epithelium is heterogeneous and comprised of subpopulations of exocrine/nestin‐positive and endocrine/nestin‐negative precursor cells. We examined this issue in two mutant mouse models characterized by protracted expression of several embryonal properties in islet cells. One mutant line comprises mice lacking mature glucagon due to abrogation of proprotein convertase‐2 (PC2−/−), responsible for the conversion of proglucagon into glucagon, while the second line consists of mice with a global deletion of the glucagon receptor (Gcgr−/−). We demonstrate that nestin is transiently expressed by acinar cells and by insulin and glucagon cells of islets of both lines of mice. In addition, the lack of glucagon signaling increased nestin mRNA levels in pancreas of mutant embryos and adult mice. We conclude that nestin+ cells located in the pancreatic primordium generate the cells of the endocrine and exocrine lineages. Furthermore, our results suggest that nestin expression is regulated by glucagon signaling. Developmental Dynamics 236:1126–1133, 2007. © 2007 Wiley‐Liss, Inc. [ABSTRACT FROM AUTHOR]