The pigment pattern of many animal species is a result of the arrangement of different types of pigment producing chromatophores. The zebrafish have three different types of chromatophores; black melanophores, yellow xanthophores and shimmering iridophores arranged in a characteristic pattern of golden and blue horizontal stripes. In the zebrafish embryo chromatophores derive from the neural crest cells. Using pax7a and pax7b zebrafish mutants we have identified a previously unknown requirement for Pax7 in the xanthophore lineage formation. The absence of Pax7 results in a severe reduction of xanthophore precursor cells and a complete depletion of differentiated xanthophores in embryos as well as adult zebrafish. In contrast, the melanophore lineage is increased in pax7a/pax7b double mutant embryos and larvae, whereas juvenile and adult pax7a/pax7b double mutant zebrafish display a severe decrease in melanophores and a pigment pattern disorganisation, indicative of a xanthophore deficient phenotype. In summary, we propose a novel role for Pax7 in the early specification of chromatophore precursor cells.