Outside the context of industrial melanism, little is known about the physiological and ecological importance of genetic melanic polymorphisms in moths. Melanin pigments are synthesized from amino acid precursors and should therefore be costly to produce in nitrogen‐limited insects. A genetic melanic polymorphism is present in adult Malacosoma disstria Hübner (Lepidoptera: Lasiocampidae), a widespread forest moth with outbreaking population dynamics. We test the hypotheses that melanin‐based colouration is physiologically costly in M. disstria, that expression of melanin‐based colouration is a plastic trait which varies with population density and nutrition, and that the genetically based melanic phenotype is disadvantaged under nutritionally poor conditions. Two experiments were used to test these hypotheses. A field study compared pigmentation and phenotypic frequencies in moths collected from high‐ and low‐density populations. A laboratory experiment investigated the effects of larval nitrogen availability on adult pigmentation and phenotypic frequencies. High population density and nitrogen limitation reduced pigmentation and size of all moths, but phenotypic frequencies were not affected in either experiment. The effects of diet on both pigmentation and size were stronger for melanic moths than for typical moths. Our results show that adult melanism in M. disstria is physiologically costly, that colour expression is plastic despite its genetic component, and that the melanic phenotype may be disadvantaged under poor conditions but favoured under good conditions. We suggest that temporal variation in selection and trait plasticity help maintain polymorphism stability.