Melanocytes are essential for skin homeostasis and protection, and their defects in humans lead to a wide array of diseases that are potentially extremely severe. To date, the analysis of molecular mechanisms and the function of human melanocytes have been limited because of the difficulties in accessing large numbers of cells with the specific phenotypes. This issue can now be addressed via a differentiation protocol that allows melanocytes to be obtained from pluripotent stem cell lines, either induced or of embryonic origin, based on the use of moderate concentrations of a single cytokine, bone morphogenic protein 4. Human melanocytes derived from pluripotent stem cells exhibit all the characteristic features of their adult counterparts. This includes the enzymatic machinery required for the production and functional delivery of melanin to keratinocytes. Melanocytes also integrate appropriately into organotypic epidermis reconstructed in vitro. The availability of human cells committed to the melanocytic lineage in vitro will enable the investigation of those mechanisms that guide the developmental processes and will facilitate analysis of the molecular mechanisms responsible for genetic diseases. Access to an unlimited resource may also prove a vital tool for the treatment of hypopigmentation disorders when donors with matching haplotypes become available in clinically relevant banks of pluripotent stem cell lines.