In mice, coat pigmentation requires a stem cell (SC) system in which the survival, proliferation, and differentiation of melanocytes (MCs) are regulated by microenvironments in hair follicles (HFs). In vitro systems are required to analyze the behavior of single melanocyte stem cells (MCSCs) and their potential to form SC systems in vivo. We describe here an experimental system for the isolation, self-renewal, and differentiation of MCSCs, as well as an in vivo reconstitution assay for assessing their potential. Using Dct(tm1(Cre)Bee)/CAG-CAT-GFP mice, we show that, in the presence of stem cell factor and basic fibroblast growth factor and the XB2 feeder cell line, purified MCSCs can undergo clonogenic proliferation, resulting in c-Kit(low) side scatter(low) cells. In culture, these cells maintain their capacity to differentiate and reconstitute an MCSC system in HFs. As these cells are present in the upper part of the HF near the bulge region, express only low levels of housekeeping genes, and are resistant to neonatal treatment with ACK2, it is likely that only MCSCs that are quiescent in vivo have clonogenic activity in vitro. We also found that MCSCs can be purified from wild-type mice by fluorescent cell sorting and can be characterized in vitro.