Step 1: Understanding the Concept
The three germ layers form different organs.
Step 2: Endoderm
Endoderm forms the lining of the gut and the glands that bud from it. The pancreas arises as outgrowths of the embryonic foregut, like the liver.
Step 3: Compare the options
Ectoderm forms skin and nervous tissue, mesoderm forms muscle, bone and blood, and epiblast is an early layer before the germ layers are set.
Final Answer:
The pancreas develops from the endoderm.
\[ \boxed{\text{(C) }\text{endoderm}} \]