The zebrafish striped pattern results from the interplay among three pigment cell types; black melanophores, yellow xanthophores and silvery iridophores, making it a valuable model to study pattern formation in vivo. It has been suggested that iridophore proliferation, dispersal and cell shape transitions play an important role during stripe formation; however the underlying molecular mechanisms remain poorly understood. Using gain- and loss-of-function alleles of leukocyte tyrosine kinase (ltk) and a pharmacological inhibitor approach, we show that Ltk specifically regulates iridophore establishment, proliferation and survival. Mutants in shady/ltk lack iridophores and display an abnormal body stripe pattern. Moonstone mutants, ltk(mne) , display ectopic iridophores, suggesting hyperactivity of the mutant Ltk. The dominant ltk(mne) allele carries a missense mutation in a conserved position of the kinase domain that highly correlates with neuroblastomas in mammals. Chimeric analysis suggests a novel physiological role of Ltk in the regulation of iridophore proliferation by homotypic competition. This article is protected by copyright. All rights reserved.