Pancreatitis and pancreatic cancer represent two major diseases of the exocrine pancreas. Pancreatitis exhibits both acute and chronic manifestations. The commonest causes of acute pancreatitis are gallstones and alcohol abuse; the latter is also the predominant cause of chronic pancreatitis. Recent evidence indicates that endotoxinemia, which occurs in alcoholics due to increased gut permeability, may trigger overt necroinflammation of the pancreas in alcoholics and one that may also play a critical role in progression to chronic pancreatitis (acinar atrophy and fibrosis) via activation of pancreatic stellate cells (PSCs). Chronic pancreatitis is a major risk factor for the development of pancreatic cancer, which is the fourth leading cause of cancer-related deaths in humans. Increasing attention has been paid in recent years to the role of the stroma in pancreatic cancer progression. It is now well established that PSCs play a key role in the production of cancer stroma and that they interact closely with cancer cells to create a tumor facilitatory environment that stimulates local tumor growth and distant metastasis. This review summarizes recent advances in our understanding of the pathogenesis of alcoholic pancreatitis and pancreatic cancer, with particular reference to the central role played by PSCs in both diseases. An improved knowledge of PSC biology has the potential to provide an insight into pathways that may be therapeutically targeted to inhibit PSC activation, thereby inhibiting the development of fibrosis in chronic pancreatitis and interrupting stellate cell–cancer cell interactions so as to retard cancer progression.