Perhaps the most obvious manifestation of the complex interplay between environmental cues, signal transduction pathways, and transcription factors underlying the genesis and differentiation of a cell lineage is provided by the enormous diversity of genetically determined pigmentation patterns. Because melanocytes, the cells responsible for skin, hair, and eye color, are dispensable for viability, the highly visible consequences of mutations affecting the melanocyte lineage (Fig. 1) has allowed over 90 independent genes to be implicated in the genesis of mouse coat color (Mouse Genome Informatics: http:// www.informatics.jax.org/). The 30 or so of these genes that have been cloned to date (http://www.cbc.umn. edu/ifpcs/micemut.htm) not only encode proteins required for the manufacture of the pigment melanin and the function of the melanosome, but also encode signaling molecules and transcription factors that play critical roles in the development of the melanocyte lineage. This unusually large genetic resource which extends to a wide variety of species has made the regulation of melanocyte development an attractive system for understanding how the coordination of gene expression required for the commitment and differentiation of a specific cell lineage is achieved. Melanocytes originate as nonpigmented precursors termed melanoblasts in the mouse neural crest at around embryonic day 10.5 (E10.5), and following migration and proliferation reach the limb buds by E12 and enter the epidermis at the level of the lateral trunk by E13/E14 (Mayer 1973). Melanocytes are found as mature pigment cells in the skin and hair follicles, as well as a range of other sites where their role as pigment-producing cells is less understood. Thus, melanocytes are present in the choroid layer of the eye, the Harderian gland, the anal canal, and in the stria vascularis of the inner ear where they are crucial for hearing because they play a vital role in the endolymph-controlled generation of action potentials (Steel and Barkway 1989; Tachibana 1999). The effects of mutations affecting genes playing a key role in the melanocyte lineage may therefore be manifest at several levels: Mutations may affect genes required for differentiation-specific functions such as the genesis of pigment, or more interestingly from the developmental perspective, any step from the specification and commitment to the melanocyte lineage, to the survival, proliferation, and migration of melanoblasts from the neural crest. Interest in the melanocyte system is also afforded by the impact on melanocytes of ultraviolet (UV) light. In humans, epidermal melanocytes respond to UV irradiation by increasing the synthesis of melanin in membrane-bound structures termed melanosomes that are transferred to surrounding keratinocytes, a process known as the tanning response. At least one role for melanin is likely to be in protection against UV-induced DNA damage (Hill 1992). The incidence of UV-induced DNA damage, however, correlates with the risk of transformation of the melanocyte to a malignant melanoma, an aggressive and increasingly common form of cancer for which a proportion of the population have a genetic predisposition. The difficult path towards understanding the molecular and genetic basis of the progression from a melanocyte to a malignant melanoma has been made easier with recent observations that link the genesis of melanoma to deregulation of pathways operating in melanocyte development. The aim of this review is to provide an overview of how gene expression in neural crest-derived melanocytes is controlled by the interplay between specific transcription factors and signal transduction pathways. Because of limitations of space, the review focuses on the regulation of the expression and function of the Microphthalmia-associated transcription factor, Mitf. For the same reason, the development of the retinal pigment epithelium (RPE), the pigmented layer of cells lying immediately behind the retina which arises via differentiation of the posterior part of the optic cup, is not discussed.