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SUMMARY Adult stem cells are crucial for growth, homeostasis and repair of adult animals. The melanocyte stem cell (MSC) and melanocyte regeneration is an attractive model for studying regulation of adult stem cells. The process of melanocyte regeneration can be divided into establishment of the MSC, recruitment of the MSC to produce committed daughter cells, and the proliferation, differentiation and survival of these daughter cells. Reduction of Kit signaling results in dose-dependent reduction of melanocytes during larval regeneration. Here, we use clonal analysis techniques to develop assays to distinguish roles for these processes during zebrafish larval melanocyte regeneration. We use these clonal assays to investigate which processes are affected by the reduction in Kit signaling. We show that the regeneration defect in kita mutants is not due to defects in MSC recruitment or in the proliferation, differentiation or survival of the daughter cells, but is instead due to a defect in stem cell establishment. Our analysis suggests that the kit MSC establishment defect results from inappropriate differentiation of the MSC lineage