Understanding how fate specification of distinct cell-types from multipotent progenitors occurs is a fundamental question in embryology. Neural crest stem cells (NCSCs) generate extraordinarily diverse derivatives, including multiple neural, skeletogenic and pigment cell fates. Key transcription factors and extracellular signals specifying NCSC lineages remain to be identified, and we have only a little idea of how and when they function together to control fate. Zebrafish have three neural crest-derived pigment cell types, black melanocytes, light-reflecting iridophores and yellow xanthophores, which offer a powerful model for studying the molecular and cellular mechanisms of fate segregation. Mitfa has been identified as the master regulator of melanocyte fate. Here, we show that an Mitf-related transcription factor, Tfec, functions as master regulator of the iridophore fate. Surprisingly, our phenotypic analysis of tfec mutants demonstrates that Tfec also functions in the initial specification of all three pigment cell-types, although the melanocyte and xanthophore lineages recover later. We show that Mitfa represses tfec expression, revealing a likely mechanism contributing to the decision between melanocyte and iridophore fate. Our data is consistent with the long-standing proposal of a tripotent progenitor restricted to pigment cell fates. Moreover, we investigate activation, maintenance and function of tfec in multipotent NCSCs, demonstrating for the first time its role in the gene regulatory network forming and maintaining early neural crest cells. In summary, we build on our previous work to characterise the gene regulatory network governing iridophore development, establishing Tfec as the master regulator driving iridophore specification from multipotent progenitors, while shedding light on possible cellular mechanisms of progressive fate restriction.