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Anaplastic lymphoma kinase (ALK) is an important drug target in many cancers, including lymphoma, neuroblastoma, and lung cancer. Here, we demonstrate proof-of-principle for a novel and inexpensive assay for ALK inhibitor activity and identification in zebrafish. We demonstrate that the human oncogenic ALK fusion, NPM-ALK, drives overproduction of iridophores, a highly visible, shiny pigment cell-type in zebrafish. Treatment with the potent ALK inhibitor, TAE684, fully inhibits production of ALK-dependent iridophores. Using our assay, we test multiple properties of TAE684 in vivo, including efficacy, specificity, and toxicity. We note that TAE684 also inhibits the closely related leukocyte tyrosine kinase (Ltk) that is required for endogenous iridophore development. Similar effects are observed with an independent inhibitor, Crizotinib. Our assay can thus be utilized to identify ALK or LTK inhibitors. Importantly, the natural reflectivity of iridophores lends itself to automation for high throughput assessment of ALK and LTK inhibitor compounds in vivo.