Dysplastic nevi (DN) are benign lesions with atypical features intermediate between that of common melanocytic nevi (CMN) and malignant melanoma (MM). Debate remains over whether DN represent progressive lesions from CMN. Through gene expression profiling and analysis of molecular gene signatures, our study revealed progressive increases in immune activation and regulation, along with pathways implicated in melanomagenesis, from CMN to DN to MM. Using criteria of 1.5 fold change and false discovery rate ≤ 0.05, we found differential expression of 7,186 probes (6,370 unique genes) with the largest difference detected between DN and MM from the standpoint of genomic melanoma progression. Despite progressive increases in the T-helper type 1 (Th1) inducing gene (IL-12), RT-PCR indicated impaired Th1 or cytotoxic T-cell response (decreased IFN-γ) in MM. Concordantly, our results indicated progressive increases in molecular markers associated with regulatory T-cells, exhausted T-cells, and tolerogenic dendritic cells, including detection of increased expression of suppressor of cytokine signaling 3 (SOCS3) in dendritic cells associated with MM. All together, our findings suggest that the increased immunosuppressive microenvironment of melanoma may contribute to unhampered proliferation of neoplastic cells. In addition, the detection of increased markers associated with tolerogenic dendritic cells in MM suggest that targeting these suppressive immune cell types may represent an alternative avenue for future immunotherapy.