Mitf encodes a basic helix-loop-helix-leucine-zipper (bHLHzip) protein that is known to function in the development of melanocytes, pigmented epithelial cells (PECs), osteoclasts, and mast cells. In this paper, we report on the isolation, expression, and overexpression of the chicken Mitf and discuss the role of its protein product in the differentiation and transdifferentiation of PECs. Northern blotting showed that chicken Mitf is predominantly expressed in embryonic retinal pigmented epithelium (PE), but is expressed at low levels in other tissues. A 5' RACE analysis revealed differences in the 5' region Mitf nRNA in PE and other tissues. Immunological analysis revealed that Mitf, the protein encoded by Mitf, is first detected in the nuclei of the optic vesicle cells at embryonic stage 13 in a restricted region covered with mesenchymal cells. From stage 14 to 24, the specific staining is observable in the PE and precursor of the PE, the outer layer of the optic cup. In embryos at stages later than stage 29 the signals for Mitf in the future iris, ciliary body, and posterior retinal regions become faint. These results show that expression of Mitf starts at the optic vesicle stage at which no other marker genes for PECs such as mmp115 and tyrosinase are expressed. Dedifferentiation of cultured retinal PECs (rPECs) was induced by phenylthiourea and testicular hyaluronidase, bFGF, or TGF-beta. Mitf expression was inhibited by these factors and reactivated during redifferentiation of the dedifferentiated cells into rPECs, showing the correlation between Mitf expression and rPEC differentiation. Retrovirus-mediated overexpression of Mtif inhibited bFGF-induced dedifferentiation and transdifferentiation of rPECs to both lens and neural cells. These findings showed that downregulation of Mitf expression is essential for the transdifferentiation of rPEC. Mitf overexpression caused hyperpigmentation in cultured rPECs and suppressed the changes in gene expression induced by bFGF. Mitf overexpression promoted expression of mmp115 and tyrosinase in bFGF-treated rPECs suggesting a critical role for Mitf in rPEC differentiation. Mitf overexpression, however, did not promote expression of another rPEC-specific gene, pP344, in bFGF-treated rPECs. This result suggests the presence of other regulatory genes promoting rPEC differentiation. The expression patterns of pax6 and Mitf are complementary both in vivo in vitro. Overexpression of Mitf inhibited expression of pax6 in cultured rPECs. These observations suggest that Mitf regulates pax6 expression negatively.