The Pax3/7 gene family has a fundamental and conserved role during neural crest formation. In people, PAX3 mutation causes Waardenburg syndrome, and murine Pax3 is essential for pigment formation. However, it is unclear exactly how Pax3 functions within the neural crest. Here we show that pax3 is expressed before other pax3/7 members, including duplicated pax3b, pax7 and pax7b genes, early in zebrafish neural crest development. Knockdown of Pax3 protein by antisense morpholino oligonucleotides results in defective fate specification of xanthophores, with complete ablation in the trunk. Other pigment lineages are specified and differentiate. As a consequence of xanthophore loss, expression of pax7, a marker of the xanthophore lineage, is reduced in neural crest. Morpholino knockdown of Pax7 protein shows that Pax7 itself is dispensable for xanthophore fate specification, although yellow pigmentation is reduced. Loss of xanthophores after reduction of Pax3 correlates with a delay in melanoblast differentiation followed by significant increase in melanophores, suggestive of a Pax3-driven fate switch within a chromatophore precursor or stem cell. Analysis of other neural crest derivatives reveals that, in the absence of Pax3, the enteric nervous system is ablated from its inception. Therefore, Pax3 in zebrafish is required for specification of two specific lineages of neural crest, xanthophores and enteric neurons.