In mouse follicular melanocytes, production of eumelanins (brown-black pigments) and pheomelanins (yellow-brownish pigments) is under the control of two intercellular signaling molecules that exert opposite actions, alpha-melanocyte-stimulating hormone (alphaMSH) which preferentially increases the synthesis of eumelanins, and agouti signal protein (ASP) whose expression favors the production of hair containing pheomelanins. In this study, we report that ASP does not only affect mature melanocytes but can also inhibit the differentiation of melanoblasts. We show that both alphaMSH and forskolin promote the differentiation of murine melanoblasts into mature melanocytes and that ASP inhibits this process. We present evidence that the expression of a specific melanogenic transcription factor, microphthalmia, and its binding to an M box regulatory element, is inhibited by ASP. We also show that, in B16 murine melanoma cells, ASP inhibits alphaMSH-stimulated expression of tyrosinase, tyrosine-related proteins 1 and 2 through an inhibition of the transcription activity of their respective promoters. Further, ASP inhibits alphaMSH-induced expression of the microphthalmia gene and reduces the level of microphthalmia in the cells. Our data demonstrate that ASP can regulate both melanoblast differentiation and melanogenesis, pointing out the key role of microphthalmia in the control of these processes.