Messenger RNA transcripts of the highly pigmented murine melanoma B16-F1 cells were compared with those from their weakly pigmented derivative B16-F10 cells by differential display. A novel gene called msg1 (melanocyte-specific gene) was found to be expressed at high levels in B16-F1 cells but at low levels in B16-F10 cells. Expression of msg1 was undetectable in the amelanotic K1735 murine melanoma cells. The pigmented murine melanocyte cell line melan-a expressed msg1, as did pigmented primary cultures of murine and human melanocytes; however, seven amelanotic or very weakly pigmented human melanoma cell lines were negative. Transformation of murine melanocytes by transfection with v-Ha-ras or Ela was accompanied by depigmentation and led to complete loss of msg1 expression. The normal tissue distribution of msg1 mRNA transcripts in adult mice was confined to melanocytes and testis. Murine msg1 and human MSG1 genes encode a predicted protein of 27 kDa with 75% overall amino acid identity and 96% identity within the C-terminal acidic domain of 54 amino acids. This C-terminal domain was conserved with 76% amino acid identity in another protein product of a novel human gene, MRG1 (msg1-related gene), isolated from normal human melanocyte cDNA by 5'-rapid amplification of cDNA ends based on the homology to msg1. The msg1 protein was localized to the melanocyte nucleus by immunofluorescence cytochemistry. We conclude that msg1 encodes a nuclear protein, is melanocyte-specific, and appears to be lost in depigmented melanoma cells.