We have shown that Wnt signals are necessary and sufficient for neural crest cells to adopt pigment cell fates. nacre, a zebrafish homolog of MITF, is required for pigment cell differentiation. We isolated a promoter region of nacre that contains Tcf/Lef binding sites, which can mediate Wnt responsiveness. This promoter binds to zebrafish Lef1 protein in vitro, and a nacre reporter construct is strongly repressed by dominant-negative Tcf in melanoma cells. Mutation of Tcf/Lef sites abolishes Lef1 binding and reporter function in vivo. Wnt signaling therefore directly activatesnacre, which in turn leads to pigment cell differentiation.