Multipotent epithelial cells with high Aldehyde dehydrogenase activity have been previously reported to exist in the adult pancreas. However, whether they represent true progenitor cells remains controversial. In this study, we isolated and characterized cells with ALDH activity in the adult mouse or human pancreas during physiological conditions or injury. We found that cells with ALDH activity are abundant in the mouse pancreas during early postnatal growth, pregnancy, and in mouse models of pancreatitis and type 1 diabetes (T1D). Importantly, a similar population of cells is found abundantly in healthy children, or in patients with pancreatitis or T1D. We further demonstrate that cells with ALDH activity can commit to either endocrine or acinar lineages, and can be divided into four sub-populations based on CD90 and Ecadherin expression. Finally, our in vitro and in vivo studies show that the progeny of ALDH1+/CD90-/Ecad- cells residing in the adult mouse pancreas have the ability to initiate Pancreatic and duodenal homeobox (Pdx1) expression for the first time. In summary, we provide evidence for the existence of a sortable population of multipotent non-epithelial cells in the adult pancreas that can commit to the pancreatic lineage following proliferation and mesenchymal to epithelial transition (MET).