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In a large mixing bowl, whisk the eggs, milk, vanilla, and sugar until smooth. Set aside.
In a food processor, add the pistachios and sugar. Pulse until well combined.
Butter a 12x8 oval baking dish. Spread ½ Tablespoon butter on both sides of each piece of bread.
Layer the Challah in the baking dish, overlapping each piece slightly. Sprinkle ½ of the nut mixture on top. Add the remaining bread on top followed by the rest of the nut mixture.
Pour the custard mixture evenly over the bread, coating each slice. Cover the dish with foil, and set it in the fridge overnight.
Preheat the oven to 350 degrees Fahrenheit.
Bake covered for 30 minutes, removing the foil the last few minutes of baking to achieve a golden brown exterior.
Serve with a drizzle of honey, if desired.
Store in the refrigerator for 3-4 days.