The endothelin receptor B gene (Ednrb) encodes a G-protein-coupled receptor that is expressed in a variety of cell types and is specifically required for the development of neural crest-derived melanocytes and enteric ganglia. In humans, mutations in this gene are associated with Waardenburg-Shah syndrome, a disorder characterized by pigmentation defects, deafness and megacolon. To address the question of whether melanocyte development depends entirely on a cell-autonomous action of Ednrb, we performed a series of tissue recombination experiments in vitro, using neural crest cell cultures from mouse embryos carrying a novel Ednrb-null allele characterized by the insertion of a lacZ marker gene. The results show that Ednrb is not required for the generation of early neural crest-derived melanoblasts but is required for the expression of the differentiation marker tyrosinase. Tyrosinase expression can be rescued, however, by the addition of Ednrb wild-type neural tubes. These Ednrb wild-type neural tubes need not be capable of generating melanocytes themselves, but must be capable of providing KIT ligand, the cognate ligand for the tyrosine kinase receptor KIT. In fact, soluble KIT ligand is sufficient to induce tyrosinase expression in Ednrb-deficient cultures. Nevertheless, these tyrosinase-expressing, Ednrb-deficient cells do not develop to terminally differentiated, pigmented melanocytes. Pigmentation can be induced, however, by treatment with tetradecanoyl phorbol acetate, which mimics EDNRB signaling, but not by treatment with endothelin 1, which stimulates the paralogous receptor EDNRA. The results suggest that Ednrb plays a significant role during melanocyte differentiation and effects melanocyte development by both cell non-autonomous and cell-autonomous signaling mechanisms.