Melanocytes evolved to produce the melanin that gives colour to our hair, eyes and skin. The melanocyte lineage also gives rise to melanoma, the most lethal form of skin cancer. The melanocyte lineage differentiates from neural crest cells during development, and most melanocytes reside in the skin and hair, where they are replenished by melanocyte stem cells. Because the molecular mechanisms necessary for melanocyte specification, migration, proliferation and differentiation are co-opted during melanoma initiation and progression, studying melanocyte development is directly relevant to human disease. Here, through the lens of advances in cellular omic and genomic technologies, we review the latest findings in melanocyte development and differentiation, and how these developmental pathways become dysregulated in disease.