Direct reprogramming provides a fundamentally new approach for the generation of patient-specific cells. Here, by screening a pool of candidate transcription factors, we identify that a combination of the three factors, MITF, SOX10 and PAX3, directly converts mouse and human fibroblasts to functional melanocytes. Induced melanocytes (iMels) activate melanocyte-specific networks, express components of pigment production and delivery system and produce melanosomes. Human iMels properly integrate into the dermal–epidermal junction and produce and deliver melanin pigment to surrounding keratinocytes in a 3D organotypic skin reconstruct. Human iMels generate pigmented epidermis and hair follicles in skin reconstitution assays in vivo. The generation of iMels has important implications for studies of melanocyte lineage commitment, pigmentation disorders and cell replacement therapies.