12-O-Tetradecanoylphorbol-13-acetate (TPA) has been reported to inhibit and/or delay the terminal differentiation of a variety of cell types. More recently, TPA has been reported to enhance melanogenesis in cultured human melanoma cells. This study focuses on the effect of TPA on the differentiation of normal avian melanocytes. TPA blocked melanogenesis in normal replicating presumptive melanoblasts, as well as in replicating pigmented melanocytes derived from the neural crest, the retinal pigment epithelium, and the pecten oculi. These normal embryonic cells not only failed to synthesize melanin but also failed to assemble premelanosomes and to assume either the characteristic dendritic processes of normal trunk melanocytes or the epithelioid morphology of the normal retinal pigment epithelial cell. This inhibition was remarkably reversible. Following removal of TPA, the previously blocked neural crest cells became pigmented and formed their characteristic dendritic processes, whereas the previously blocked retinal cells formed a pigmented epithelium. The effect of TPA on these normal cells was dependent on duration of exposure and degree of differentiation of the cells at the time of exposure. TPA induced the formation of elongated neurite-like processes in the amelanotic neural crest cells which differed in their cytoskeletal structure from the dendritic processes of normal trunk melanocytes. These TPA-blocked pigment cells with elongated processes bear a striking morphological resemblance to presumptive myoblasts, chondroblasts, and fibroblasts treated with the tumor promoter.