Mouse skin melanocytes originate from the neural crest and subsequently invade the epidermis and migrate into the hair follicles (HF) where they proliferate and differentiate. Here we demonstrate a role for the chemokine SDF-1/CXCL12 and its receptor CXCR4 in regulating the migration and positioning of melanoblasts during HF formation and cycling. CXCR4 expression by melanoblasts was upregulated during the anagen phase of the HF cycle. CXCR4-expressing cells in the HF also expressed the stem cell markers nestin and LEX, the neural crest marker SOX10 and the cell proliferation marker PCNA. SDF-1 was widely expressed along the path taken by migrating CXCR4-expressing cells in the outer root sheath (ORS), suggesting that SDF-1-mediated signaling might be required for the migration of CXCR4 cells. Skin sections from CXCR4-deficient mice, and skin explants treated with the CXCR4 antagonist AMD3100, contained melanoblasts abnormally concentrated in the epidermis, consistent with a defect in their migration. SDF-1 acted as a chemoattractant for FACS-sorted cells isolated from the anagen skin of CXCR4-EGFP transgenic mice in vitro, and AMD3100 inhibited the SDF-1-induced migratory response. Together, these data demonstrate an important role for SDF-1/CXCR4 signaling in directing the migration and positioning of melanoblasts in the HF.