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Mesenchymal cells in the developing pancreas express the neural stem cell marker nestin and the transcription factor islet-1 (Isl-1). Using defined culture conditions we isolated on a single cell basis nestin producing cells from human pancreatic islets. These cells were immortalized with lentiviral vectors coding for telomerase and mBmi. They are positive for Isl-1 and nestin and have the potential to adopt a pancreatic endocrine phenotype with expression of critical transcription factors including Ipf-1, Isl-1, Ngn-3, Pax4, Pax6, Nkx2.2, and Nkx6.1 as well as the islet hormones insulin, glucagon, and somatostatin. In addition, they can be differentiated into human albumin producing cells in vivo when grafted into a SCID mouse liver. In accordance with a mesenchymal phenotype, the cells were also able to adopt adipocytic or osteocytic phenotypes in vitro. In conclusion, cultured pancreatic islets contain nestin and Isl-1 positive mesenchymal stem cells with multipotential developmental capacity.