Substantial regeneration of both the endocrine and exocrine pancreas occurs after a 90% partial pancreatectomy in the young adult rat. We have reported previously that replication of preexisting islet and exocrine cells is enhanced 3- to 4-fold. Here, we report a second pathway of regeneration, that of proliferation and differentiation of precursor cells in the ductal epithelium. As shown with in vivo pulse labeling using 5-bromo-2'-deoxyuridine, an expansion of the ductal epithelium occurs. Proliferation is seen first in the common pancreatic duct and sequentially in smaller ducts of the ductal tree as focal areas of proliferation small ductules form. By 60 h after pancreatectomy, only these focal areas show heavy 5-bromo-2'-deoxyuridine staining. These proliferating ductules comprise 12.8% of the pancreatic volume at 3 days after pancreatectomy but are uncommon at 7 days after pancreatectomy. Coincident with the appearance and disappearance of these regions was a 3.5-fold increased growth of the pancreatic remnant compared with its equivalent of sham animals. These small ductules differentiate into new pancreatic islets and exocrine tissue, forming new lobules of pancreas that are indistinguishable from the preexisting ones. This second pathway of rapid regeneration recapitulates embryonic development in its pattern of ductal proliferation and subsequent differentiation. Furthermore, these studies provide evidence of the presence of precursor/stem cells in the adult pancreas.