The immune system plays a complex role in the development and progression of pancreatic cancer. Inflammation can promote the formation of premalignant lesions and accelerate pancreatic cancer development. Conversely, pancreatic cancer is characterized by an immunosuppressive environment, which is thought to promote tumor progression and invasion. Here we review the current literature describing the role of the immune response in the progressive development of pancreatic cancer, with a focus on the mechanisms that drive recruitment and activation of immune cells at the tumor site, and our current understanding of the function of the immune cell types at the tumor. Recent clinical and preclinical data are reviewed, detailing the involvement of the immune response in pancreatitis and pancreatic cancer, including the role of specific cytokines and implications for disease outcome. Acute pancreatitis is characterized by a predominantly innate immune response, while chronic pancreatitis elicits an immune response that involves both innate and adaptive immune cells, and often results in profound systemic immune-suppression. Pancreatic adenocarcinoma is characterized by marked immune dysfunction driven by immunosuppressive cell types, tumor-promoting immune cells, and defective or absent inflammatory cells. Recent studies reveal that immune cells interact with cancer stem cells and tumor stromal cells, and these interactions have an impact on development and progression of pancreatic ductal adenocarcinoma (PDAC). Finally, current PDAC therapies are reviewed and the potential for harnessing the actions of the immune response to assist in targeting pancreatic cancer using immunotherapy is discussed.