Objective: The objective of our present study was to assess the efficacy of carcinoembryonic antigen (CEA) for differentiating and diagnosis of pancreatic and liver diseases in Pokhara valley. Materials and methods: A hospital based retrospective study was carried out using data retrieved from the register maintained in the Department of Biochemistry of the Manipal Teaching Hospital, Pokhara, Nepal between 1st January, 2011 and 31st October, 2011. Estimation of CEA was performed by ELISA reader for all cases. Approval for the study was obtained from the institutional research ethical committee. Results: Of the 771 subjects, 208 (27%), 60(7.8%), 240(31.1%), 54(7.0%), 75(9.7%), 59(7.7%), 75(9.7%) cases were of active chronic hepatitis, cryptogenic cirrhosis, alcoholic cirrhosis, primary biliary cirrhosis, hepatoma, acute or chronic pancreatitis, carcinoma of pancreas respectively. The majority of cases (104) of active chronic hepatitis had CEA levels <5ng/ml(50%). CEA levels were found to be increased in cases of alcoholic cirrhosis with maximum number of cases (106) in range of 10 to 20 ng/ml (44%). There were no cases having more than 20ng/ml of CEA in primary biliary cirrhosis and acute or chronic pancreatitis. In cases of pancreatic cancer, maximum number of cases (35) were having CEA >20ng/ml(47%). Conclusion: High levels of CEA are associated with advanced stage of disease. CEA can thus provide an important improvement in the diagnosis by differentiating pancreatic cancer especially from chronic pancreatitis when there is a high suspicion of malignancy. Increased CEA levels may also signify progression from benign to malignant transformation in the liver.