Dorso-ventral (DV) countershading is a highly-conserved pigmentary adaptation in vertebrates. In mammals, spatially regulated expression of agouti-signaling protein (ASIP) generates the difference in shading by driving a switch between the production of chemically-distinct melanins in melanocytes in dorsal and ventral regions. In contrast, fish countershading seemed to result from a patterned DV distribution of differently-coloured cell-types (chromatophores). Despite the cellular differences in the basis for counter-shading, previous observations suggested that Agouti signaling likely played a role in this patterning process in fish. To test the hypotheses that Agouti regulated counter-shading in fish, and that this depended upon spatial regulation of the numbers of each chromatophore type, we engineered asip1 homozygous knockout mutant zebrafish. We show that loss-of-function asip1 mutants lose DV countershading, and that this results from changed numbers of multiple pigment cell-types in the skin and on scales. Our findings identify asip1 as key in the establishment of DV countershading in fish, but show that the cellular mechanism for translating a conserved signaling gradient into a conserved pigmentary phenotype has been radically altered in the course of evolution.