Due to increasing utilization of cross-sectional imaging, asymptomatic pancreatic cysts are frequently being diagnosed. Many of these cysts have premalignant potential and offer a unique opportunity for cancer prevention. Mucinous cystic neoplasm and intraductal papillary mucinous neoplasm are the major premalignant cystic neoplasms of pancreas. The prediction of the risk of malignancy (incidental and future risk of malignant transformation) and balancing the risks of watchful waiting with that of operative management with associated mortality and morbidity is the key to the management of these lesions. We review the literature that has contributed to the development of our approach to the management of these cystic neoplasms. We provide an overview of the key features used in diagnosis and in predicting malignancy. Particular attention is given to the natural history and management decision making.