Melanin is the pigment responsible for every color seen in a horse coat, mane, tail, skin, and eyes. All coat color in horses traces to a single pigment-producing cell type, the melanocyte, which manufactures melanin and deposits it into the growing hair shaft.
Two chemically distinct forms exist. Eumelanin produces black and brown pigment. Phaeomelanin produces red and yellow pigment. Every color a horse displays (bay, chestnut, black, palomino, buckskin, gray) comes from one or both forms being expressed, suppressed, or diluted by modifier genes acting on the underlying pigment.
The Extension locus (the “red factor”) determines which type is made: horses homozygous for the recessive allele (e/e) can only produce phaeomelanin, giving a chestnut or sorrel coat. All other base colors require at least one dominant E allele, which permits eumelanin production. The Agouti locus then controls where eumelanin is distributed, restricting it to the points (mane, tail, lower legs) in bay horses and allowing full-body expression in black horses.
Dilute genes such as Cream, Dun, Pearl, and Champagne do not change which pigment is present. They reduce its concentration or alter its structure within the hair shaft, shifting the visible color without adding new pigment chemistry.