Cholesterol has been suggested to regulate cell differentiation. In this study, we have examined the effects of cholesterol modulation on pigmentation of skin using a treatment with methyl-beta-cyclodextrin (MbetaCD), a specific cholesterol-binding agent. Treatment with MbetaCD reduced pigmentation in human melanocyte and cultured skin. This decrease in pigmentation was related to the inhibition of the expression of tyrosinase and microphthalmia-associated transcription factor of melanocytes. Stimulation of melanocytes with MbetaCD led to the time-dependent phosphorylation of extracellular signal-regulated kinase (ERK). Furthermore, ERK functionally regulated the MbetaCD-induced melanin formation in melanocytes; a ERK inhibitor, PD98059, almost completely attenuated the MbetaCD-mediated inhibition of melanin synthesis and down-regulation of MITF and tyrosinase expression. These results suggest that cholesterol reduction by MbetaCD inhibit melanin synthesis via ERK activation and subsequent MITF downregulation.