Fish coloration, evolved from selection and adaptation, is a prominent feature of remarkable aquaculture merits. Fish possess more pigment cell types than any other vertebrates and are an excellent model for the study of mechanisms underlying skin coloration and pigmentation at levels from molecular genetics to system biology. How to effectively improve skin colour in ornamental and aquaculture fish has long been a focus on selective breeding programmes. In this review article, we introduce different types of chromatophore and early development of pigmentation, describe cellular mechanisms related to morphological and physiological changes of body colour and demonstrate applications of single‐sex control and molecular marker–assisted breeding in body colour selection. We also reviewed genes that have been found involving in neural crest migration and development, as well as those involved in melanin‐based coloration and other types of pigmentation, and explored how to use transgenic technology for enhancing fish body colour. The applications of genome editing and other omics technologies in relation to fish coloration are also illustrated. Finally, we present our perspectives about future fish coloration research and practice in aquaculture. Taken together, this review is expected to provide an update on cellular and molecular mechanisms in fish coloration and pigmentation, which will likely promote body colour–based molecular breeding programmes in aquaculture.