THe Pumpkin was added in the 1.2.1 Update. You can buy Pumpkin Seeds from the Dryad for 2 Silver and 5 Copper. You can plant the seeds on overworld grass and eventually a Pumpkin will grow. When harvested, it will drop 6 - 14 Pumpkins and a very rare chance of dropping a Magical Pumpkin Seed, which summons the Squashling. As of 1.2.3, Pumpkins will randomly spawn where there is grass.