Nester's Dagger is obtained from an Ankheg found north of Tenya's house in the Wyrm's Crossing area. It looks just like a normal Dagger and can be wielded as such, but it is, in fact, a quest item. This item can easily be found long before it is needed in Chapter 5 of the main quest line, with no hint of its future usefulness.

A dwarf Quinn in Baldur´s Gate Nothwest area (locked house) find this dagger during his friend Nester was killedy by ankheg. Give dagger to Quinn for 950 XP and gem.