The clonal isolation of putative adult pancreatic precursors has been an elusive goal of researchers seeking to develop cell replacement strategies for diabetes. We report the clonal identification of multipotent precursor cells from the adult mouse pancreas. The application of a serum-free, colony-forming assay to pancreatic cells enabled the identification of precursors from pancreatic islet and ductal populations. These cells proliferate in vitro to form clonal colonies that coexpress neural and pancreatic precursor markers. Upon differentiation, individual clonal colonies produce distinct populations of neurons and glial cells, pancreatic endocrine beta-, alpha- and delta-cells, and pancreatic exocrine and stellate cells. Moreover, the newly generated beta-like cells demonstrate glucose-dependent Ca(2+) responsiveness and insulin release. Pancreas colonies do not express markers of embryonic stem cells, nor genes suggestive of mesodermal or neural crest origins. These cells represent a previously unidentified adult intrinsic pancreatic precursor population and are a promising candidate for cell-based therapeutic strategies.