The development of distinct cell lineages from unspecified precursors is the result of complex interactions between cell-extrinsic cues and the crucial programs of gene expression. To study such interactions, we are focusing on the development of pigment cells which are derived from either of two sources, the neural crest or the neuroepithelium of the optic vesicle, and which are of crucial importance for the development and function of sensory organs such as the eye and the ear. Both neural crest and neuroepithelial pigment cells depend on the basic helix-loop-helix-zipper transcription factor MITF that regulates cell proliferation and the expression of several genes involved in pigment synthesis. The dependence of MITF on regulation by growth factors, however, is fundamentally different in the optic neuroepithelium and the neural crest. In the optic vesicle, MITF is intially co-expressed along with retinal transcription factors. By signaling through FGF receptors which are tyrosine kinase receptors stimulated by FGFs emanating from the surface ectoderm, MITF is then downregulated transcriptionally in the presumptive retina, thus allowing the formation of a retina at the expense of a pigment epithelium. In contrast, in the neural crest, where the tyrosine kinase receptor KIT plays a key role in pigment cell development, KIT signaling does not regulate MITF expression transcriptionally. Rather, it appears to have a role in modulating MITF post-transcriptionally and in influencing the expression of MITF target genes in a gene-selective way. We are currently focusing on the elucidation of the underlying molecular principles of these differences. Furthermore, by studying MITF expression and function in invertebrates and early vertebrates, we are tyring to correlate these differences with the distinct evolutionary history of the neuroepithelium and the neural crest. These studies should ultimately help us in regulating cell fates in a precise manner and provide means to therapeutically replace degenerating cells as they are encountered, for instance, during the course of retinal diseases.