Satellites carrying sources of entangled photons could establish a global quantum network, enabling private encryption keys between any two points on Earth. Despite numerous proposals, demonstration of space-based quantum systems has been limited due to the cost of traditional satellites. We are using very small spacecraft to accelerate progress. We report the in-orbit operation of a photon pair source aboard a 1.65 kg nanosatellite and demonstrate pair generation and polarization correlation under space conditions. The in-orbit photon correlations exhibit a contrast of 97 ± 2%, matching ground-based tests. This pathfinding mission overcomes the challenge of demonstrating in-orbit performance for the components of future entangled photon experiments. Ongoing operation establishes the in-orbit lifetime of these critical components. More generally, this demonstrates the ability for nanosatellites to enable faster progress in space-based research.