It is widely held that cells with metastatic properties such as invasiveness and expression of matrix metalloproteinases arise through the stepwise accumulation of genetic lesions arising from genetic instability and “clonal evolution.” By contrast, we show here that in melanomas invasiveness can be regulated epigenetically by the microphthalmia-associated transcription factor, Mitf, via regulation of the DIAPH1 gene encoding the diaphanous-related formin Dia1 that promotes actin polymerization and coordinates the actin cytoskeleton and microtubule networks at the cell periphery. Low Mitf levels lead to down-regulation of Dia1, reorganization of the actin cytoskeleton, and increased ROCK-dependent invasiveness, whereas increased Mitf expression leads to decreased invasiveness. Significantly the regulation of Dia1 by Mitf also controls p27^Kip1-degradation such that reduced Mitf levels lead to a p27^Kip1-dependent G1 arrest. Thus Mitf, via regulation of Dia1, can both inhibit invasiveness and promote proliferation. The results imply variations in the repertoire of environmental cues that determine Mitf activity will dictate the differentiation, proliferative, and invasive/migratory potential of melanoma cells through a dynamic epigenetic mechanism.