Autoimmune pancreatitis (AIP) is a newly described entity in which autoimmune mechanisms seem to be involved in pathogenesis. As AIP responds dramatically to steroid therapy, accurate diagnosis of AIP is necessary to avoid unnecessary laparotomy or pancreatic resection. It is important to misdiagnose pancreatic cancer as AIP as well as to misdiagnose AIP as pancreatic cancer. Currently, AIP is diagnosed on the basis of combination with clinical, laboratory, histological and imaging studies according to diagnostic criteria. As fibroinflammatory process in AIP responds well to steroid, administration of oral steroid has become standard therapy for AIP. However, the effect of steroid treatment on the natural history of AIP is not known. Indications of steroid therapy for AIP are thought to be obstructive jaundice due to stenosis of the bile duct, associated extrapancreatic sclerosing lesions, and diabetes mellitus coincidental with AIP. Oral prednisolone is usually initiated at 30-40 mg/day and it is tapered by 5 mg every 1-2 weeks. Serological and imaging tests are followed periodically after commencement of steroid therapy. Patients in whom complete radiological improvement is documented can stop their medication. To prevent relapses, continued maintenance therapy with prednisolone 2.5-5 mg/ day is sometimes required. Patients who relapse should be re-treated with high-dose steroid therapy. As most AIP patients are elderly, clinicians should be aware of developing steroid-related complication. A poor response to steroid should raise the possibility of pancreatic cancer and the need for further examination, including laparotomy.