Nerve growth factor (NGF) is critical to the development and maintenance of the peripheral nervous system, but its possible roles in other organ systems are less well characterized. We have recently shown that human epidermal melanocytes, pigment cells derived from the neural crest, express the NGF receptor (p75 NGF-R) in vitro (Peacocke, M., M. Yaar, C. P. Mansur, M. V. Chao, and B. A. Gilchrest. 1988. Proc. Natl. Acad. Sci. USA. 85:5282-5286). Using cultured human skin-derived cells we now demonstrate that the melanocyte p75 NGF-R is functional, in that NGF stimulation modulates melanocyte gene expression; that exposure to an NGF gradient is chemotactic for melanocytes and enhances their dendricity; and that keratinocytes, the dominant epidermal cell type, express NGF messenger RNA and hence are a possible local source of NGF for epidermal melanocytes in the skin. These combined data suggest a paracrine role for NGF in human epidermis.