The reptile famous for changing its skin color to blend with surroundings is the chameleon.
Chameleons are specialized lizards in the family Chamaeleonidae. Their color changes come from layers of skin containing pigments and microscopic guanine crystals. By altering the spacing of these crystals, a chameleon changes which wavelengths of light its skin reflects.
Camouflage is only one reason for the change. Chameleons also shift color to communicate, show aggression or submission, respond to stress, and regulate body temperature. A darker color can help an ectothermic chameleon absorb more heat, while lighter colors can reflect it.
A common mix-up is assuming that every chameleon instantly copies any background like a living television screen. Color-changing ability varies by species, and communication and thermoregulation are often more important than camouflage. Cuttlefish and octopuses can also change color, but they are mollusks, not reptiles.