Studies of mice containing mutations in the genes for a receptor tyrosine kinase, c-kit, or its cognate ligand, Steel factor (SLF), establish that this signaling pathway is required for the development of melanocytes from their precursors in the embryonic neural crest (NC). In order to define the mechanism of this requirement, we have labeled cells expressing c-kit with an anti-c-kit antibody (ACK2) and studied the action of SLF on these cells in cultures of murine trunk NC. c-kit positive (c-kit+) cells first appeared after 2 days in culture and were morphologically indistinguishable from other NC cells. These cells subsequently expressed tyrosinase-related protein, an early marker for the melanocyte lineage, and became pigmented in the presence of a phorbol ester. Further, elimination of the c-kit+ population, by incubating the cultures in ACK2, resulted in the ablation of the melanocyte population, but had no effect on the generation of other neural crest derivatives. These data indicate that c-kit+ cells arising from the neural crest are melanocyte progenitors. The addition of SLF to these cultures stimulated an increase in the number of c-kit+ cells, and further studies indicated that SLF acts as both a survival and a proliferative factor for c-kit+ cells. These findings provide a mechanism of regulation of melanocyte development, whereby c-kit is exclusively expressed by melanocyte progenitors within the neural crest precursor population, and subsequent survival and proliferation of these progenitors is regulated by SLF.