This is a model Sepioteuthis chromatophore. It is a simplified example of an actual pigment cell in the squid dermis.

Think of the pigment cell in the chromatophore, as a flexible bag of color. It can be stretched out to cover a large, flat area or relaxed to shrink back to a small, retracted point. The cell is attached to 30 radial muscle fibers at various points along the edge in a relative plane parallel to the skin surface. These muscles are in turn controlled by a nerve fiber. When a nerve impulse travels to the muscles it causes the muscle fiber to contract. The muscles pull in different directions and expand the cell. Relaxing the muscles allows the cells to return to a smaller and more compact shape, thus reducing the area of the chromatophore and making the pigmented area shrink.