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. The neuroepithelial pigment cells are crucial for the development and function of the eye, and the neural crest-derived pigment cells for the development and function of the inner ear. Both types of pigment cells depend on the basic helix-loop-helix-zipper transcription factor MITF that regulates their proliferation and the expression of several pigment cell-specific genes. In the optic vesicle, MITF is initially 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. In situations where this downregulation does not occur, either experimentally or as a result of mutations in distinct MITF-regulatory genes, retinal cell proliferation is impeded or even abrogated at the expense of development into pigment cells. This highlights the role of extracellular signaling and the importance of MITF in regulating cell proliferation and differentiation. In the neural crest, where the tyrosine kinase receptor KIT and the G-coupled receptor EDNRB play key roles in pigment cell development, signaling through these receptors does not appear to regulate Mitf expression transcriptionally but may rather modulate MITF by post-translational modifications. Using phospho-MITF-specific antibodies and phosphorylation site-specific mutational approaches in mice, we are currently focusing on the elucidation of the underlying molecular principles of these regulations. Furthermore, by studying MITF in invertebrates and early vertebrates, we are correlating the organization and function(s) of Mitf 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.