We report the isolation and identification of a new mutation affecting pigment cell fate in the zebrafish neural crest. Homozygous nacre (nac(w2)) mutants lack melanophores throughout development but have increased numbers of iridophores. The non-crest-derived retinal pigment epithelium is normal, suggesting that the mutation does not affect pigment synthesis per se. Expression of early melanoblast markers is absent in nacre mutants and transplant experiments suggested a cell-autonomous function in melanophores. We show that nac(w2) is a mutation in a zebrafish gene encoding a basic helix-loop-helix/leucine zipper transcription factor related to microphthalmia (Mitf), a gene known to be required for development of eye and crest pigment cells in the mouse. Transient expression of the wild-type nacre gene restored melanophore development in nacre(-/-) embryos. Furthermore, misexpression of nacre induced the formation of ectopic melanized cells and caused defects in eye development in wild-type and mutant embryos. These results demonstrate that melanophore development in fish and mammals shares a dependence on the nacre/Mitf transcription factor, but that proper development of the retinal pigment epithelium in the fish is not nacre-dependent, suggesting an evolutionary divergence in the function of this gene.