Many obstacles to belief in stem cells for melanocytes arise in the routine practice of cutaneous histopathology. However, the fundamental principle of stem cell theory says that normal stem cells arise during development, are present in adult organs as tissue-determined stem cells, and are little changed, if at all, from their embryonic counterparts. This paradox can be resolved by focusing on the process of epidermal melanocyte development in utero. Stem cells for melanocytes originate in the neural crest. Although much remains to be learned, this author proposes that these stem cells then take a small step to the paraspinal ganglia and then follow the axonal signposts to the skin provided in the course of normal cutaneous innervation. The epidermis may then induce these stem cells in the nerve sheath to give rise to immature dermal melanocytes, which migrate up into the epidermis. It is proposed that these melanocyte stem cells also persist after birth in the superficial nerve sheath and give rise to transient, immature, inconspicuous dermal migratory melanocytes when replacements for epidermal melanocytes are needed in postnatal skin.