Melanocytes are cells of neural crest origin. In the human epidermis, they form a close association with keratinocytes via their dendrites. Melanocytes are well known for their role in skin pigmentation, and their ability to produce and distribute melanin has been studied extensively. One of the factors that regulates melanocytes and skin pigmentation is the locally produced melanocortin peptide alpha-MSH. The effects of alpha-MSH on melanogenesis are mediated via the MC-1R and tyrosinase, the rate-limiting enzyme in the melanogenesis pathway. Binding of alpha-MSH to its receptor increases tyrosinase activity and eumelanin production, which accounts for the skin-darkening effect of alpha-MSH. Other alpha-MSH-related melanocortin peptides, such as ACTH1-17 and desacetylated alpha-MSH, are also agonists at the MC-1R and could regulate melanocyte function. Recent evidence shows that melanocytes have other functions in the skin in addition to their ability to produce melanin. They are able to secrete a wide range of signal molecules, including cytokines, POMC peptides, catecholamines, and NO in response to UV irradiation and other stimuli. Potential targets of these secretory products are keratinocytes, lymphocytes, fibroblasts, mast cells, and endothelial cells, all of which express receptors for these signal molecules. Melanocytes may therefore act as important local regulators of a range of skin cells. It has been shown that alpha-MSH regulates NO production from melanocytes, and it is possible that the melanocortins regulate the release of other signalling molecules from melanocytes. Therefore, the melanocortin signaling system is one of the important regulators of skin homeostasis.