Pigment synthesis by hair follicle melanocytes is modulated by a large number of environmental and genetic factors, many of which are discussed in this review. Eumelanic (non-yellow) pigment is produced by hair follicle melanocytes following the binding of alpha-melanocyte stimulating hormone to melanocortin receptor 1. Binding of this hormone to the melanocyte membrane is blocked by agouti signaling protein (ASP) which is encoded by the agouti locus and results in the synthesis of yellow pigment, instead of non-yellow (black/brown) pigment. The cyclical release of ASP by hair follicle cells results in a black/brown hair with a subapical yellow band. This is the wild-type coat color pattern of many mammals and is called agouti. Several dominant mutations at the agouti locus in mice, induced by retrotransposon-like intracisternal A particles, result in ectopic over-expression of ASP and animals with much higher proportions of all-yellow hairs. This abnormal presence of ASP in essentially all body cells results in the 'yellow agouti obese mouse syndrome.' The obesity has been associated with binding of ASP to melanocortin receptor 4 inactivating the latter. The syndrome also includes hyperinsulinemia, increased somatic growth, and increased susceptibility to hyperplasia and carcinogenesis. The physiologic and molecular bases for these syndrome components have not yet been elucidated. This historically orientated review is subdivided, where applicable, into pre- and post-1992 subsections to emphasize the impact of the cloning of the agouti and extension loci and their protein products on the identification of the molecular and physiological pathways modulating the manifold aspects of pheomelanogenesis.