Dermal melanocytosis is commonly seen in the newborn period and is frequently a concern to parents and providers. Four clinically distinct entities are recognized: nevus of Ota, nevus of Ito, Mongolian spots, and dermal melanocyte hamartoma. This article reviews these disorders, with special emphasis on melanocyte biology and important associated systemic disorders such as rare malignant transformations and inborn errors of metabolism. Recent findings have highlighted the increased risk of malignancy in patients with nevus of Ota, especially ocular, central nervous system, and cutaneous tumors. Although rarely seen, cutaneous melanoma occurs in association with nevus of Ito. Extensive, dark, and progressive Mongolian spots may be more likely than isolated lesions to be associated with inborn errors of metabolism, such as Hurler's disease and monosialotetrahexosylganglioside (GM1) gangliosidosis. New laser technology utilizing Q-switched alexandrite lasers has shown promise for the cosmetic improvement of dermal melanocytosis. While most dermal melanocytosis resolves by the toddler years and does not pose long-term risks to the affected individuals, some patients may have underlying associated conditions that pose significant health concerns. Pediatric care providers must be familiar with these associated conditions and refer to a dermatologist when in doubt, to confirm the diagnosis and determine appropriate follow-up care.