The mouse mahoganoid mutation abrogating Mahogunin Ring Finger-1 (MGRN1) E3 ubiquitin ligase expression causes hyperpigmentation, congenital heart defects and neurodegeneration. To study the pathophysiology of MGRN1 loss, we compared Mgrn1-knockout melanocytes with genetically matched controls and melan-md1 (mahoganoid) melanocytes. MGRN1 knockout induced a more differentiated and adherent phenotype, decreased motility, increased the percentage of cells in the S phase of the cell cycle and promoted genomic instability, as shown by stronger γH2AX labelling, increased burden of DNA breaks and higher abundance of aneuploid cells. Lack of MGRN1 expression decreased the ability of melanocytes to cope with DNA breaks generated by oxidizing agents or hydroxyurea-induced replicative stress, suggesting a contribution of genomic instability to the mahoganoid phenotype. MGRN1 knockout in B16-F10 melanoma cells also augmented pigmentation, increased cell adhesion to collagen, impaired 2D and 3D motility and caused genomic instability. Tumors formed by Mgrn1-KO B16-F10 cells had lower mitotic indices, fewer Ki67-positive cells and showed a trend towards smaller size. In short-term lung colonization assays Mgrn1-KO cells showed impaired colonization potential. Moreover, lower expression of MGRN1 is significantly associated with better survival of human melanoma patients. Therefore, MGRN1 might be an important phenotypic determinant of melanoma cells.