Can dogs only see in black and white?

No, but there is a limit to the colors they can see. To see colors, dogs — and people — rely on special cells (the most basic units of structure and function in an organism) in their eyes. These cells are called cones. Humans have three types of cones, which allow them to see a rainbow of colors. But dogs only have two types of cones. These allow them to see shades of blue and yellow the best. But they are unable to tell the difference between certain greens and reds.

Source: Scholastic SuperScience, 2006