SOX10 is a high-mobility-group transcription factor that plays a critical role in the development of neural crest-derived melanocytes. At E11.5, mouse embryos homozygous for the Sox10(Dom) mutation entirely lack neural crest-derived cells expressing the lineage marker KIT, MITF, or DCT. Moreover, neural crest cell cultures derived from homozygous embryos do not give rise to pigmented cells. In contrast, in Sox10(Dom) heterozygous embryos, melanoblasts expressing KIT and MITF do occur, albeit in reduced numbers, and pigmented cells eventually develop in nearly normal numbers both in culture and in vivo. Intriguingly, however, Sox10(Dom)/+ melanoblasts transiently lack Dct expression both in culture and in vivo, suggesting that during a critical developmental period SOX10 may serve as a transcriptional activator of Dct. Indeed, we found that SOX10 and DCT colocalized in early melanoblasts and that SOX10 is capable of transactivating the Dct promoter in vitro. Our data suggest that during early melanoblast development SOX10 acts as a critical transactivator of Dct, that MITF, on its own, is insufficient to stimulate Dct expression, and that delayed onset of Dct expression is not deleterious to the melanocyte lineage.