Skin pigmentation is accomplished by production of melanin in specialized membrane‐bound organelles termed melanosomes and by transfer of these organelles from melanocytes to surrounding keratinocytes. The mechanism by which these cells transfer melanin is yet unknown. A central role has been established for the protease‐activated receptor‐2 of the keratinocyte which effectuates melanin transfer via phagocytosis. What exactly is being phagocytosed – naked melanin, melanosomes or melanocytic cell parts – remains to be defined. Analogy of melanocytes to neuronal cells and cells of the haemopoietic lineage suggests exocytosis of melanosomes and subsequent phagocytosis of naked melanin. Otherwise, microscopy studies demonstrate cytophagocytosis of melanocytic dendrites. Other plausible mechanisms are transfer via melanosome‐containing vesicles shed by the melanocyte or transfer via fusion of keratinocyte and melanocyte plasma membranes with formation of tunnelling nanotubes. Molecules involved in transfer are being identified. Transfer is influenced by the interactions of lectins and glycoproteins and, probably, by the action of E‐cadherin, SNAREs, Rab and Rho GTPases. Further clues as to what mechanism and molecular machinery will arise with the identification of the function of specific genes which are mutated in diseases that affect transfer.