Through recurrent bouts synchronous with the hair cycle, quiescent melanocyte stem cells (McSCs) become activated to generate proliferative progeny that differentiate into pigment-producing melanocytes. The signaling factors orchestrating these events remain incompletely understood. Here, we use single-cell RNA sequencing with comparative gene expression analysis to elucidate the transcriptional dynamics of McSCs through quiescence, activation, and melanocyte maturation. Unearthing converging signs of increased WNT and BMP signaling along this progression, we endeavored to understand how these pathways are integrated. Employing conditional lineage-specific genetic ablation studies in mice, we found that loss of BMP signaling in the lineage leads to hair graying due to a block in melanocyte maturation. We show that interestingly, BMP signaling functions downstream from activated McSCs and maintains WNT effector, transcription factor LEF1. Employing pseudotime analysis, genetics, and chromatin landscaping, we show that following WNT-mediated activation of McSCs, BMP and WNT pathways collaborate to trigger the commitment of proliferative progeny by fueling LEF1- and MITF-dependent differentiation. Our findings shed light upon the signaling interplay and timing of cues that orchestrate melanocyte lineage progression in the hair follicle and underscore a key role for BMP signaling in driving complete differentiation.