Insufficient β-cell mass is a common denominator for both type1 and type 2 diabetes. In vitro generation of β-cells from islet precursor cells, exocrine cells or ductal epithelia provide an alternative source of insulin-producing cells. However the presence of multipotent precursor cells within the pancreas is also deliberated. In this study we isolated mesenchymal stromal cell (MSC)-like cells from adult mouse pancreas by collagenase digestion. We used Knockout DMEM for our isolation procedure and the floating islets and acini were removed after 48 h. This strategy permitted the adhesion of stromal cells with typical mesenchymal morphology. These cells not only expressed MSC-specific markers like Sca-1, CD90.2, CD73, and CD44 but also generated osteocytes, adipocytes, and neurons when induced with specific growth media. Upon exposure to islet differentiation serum-free cocktail a significant upregulation of pancreatic markers like Nkx2.2, Nkx6.1, Pdx1, insulin, and somatostatin was seen. The differentiated islet-like cell aggregates (ICAs) secreted insulin which increased over the days in culture in presence of basal glucose levels. Taken together, our data strongly indicate that there is a tissue-resident precursor population within the pancreas that can be exploited for islet neogenesis in vitro. J. Cell. Biochem. 114: 2240–2247, 2013. © 2013 Wiley Periodicals, Inc.