Cyclic AMP (cAMP) is a ubiquitous second messenger that regulates a variety of biological processes. The magnitude and duration of cAMP expression are regulated by both production and hydrolysis. Melanocyte-stimulating hormone (MSH) plays a crucial role in pigment cell differentiation via cAMP-regulated expression of the master transcription factor MITF. We report the identification of phosphodiesterase 4D3 as a direct target of the MSH/cAMP/MITF pathway. This creates a negative feedback loop that induces refractoriness to chronic stimulation of the cAMP pathway in melanocytes. This homeostatic pathway highlights a potent mechanism controlling melanocyte differentiation that may be amenable to pharmacologic manipulation for skin cancer prevention.