The mechanism by which malignant melanoma (MM) cells survive in lymph nodes is poorly understood. One possible mechanism by which MM cells can escape immune surveillance is through upregulation of immunomodulatory enzymes such as indoleamine 2,3-dioxygenase (IDO). In this study, 25 cases of MM lymph node metastases from patients with long and short survival were evaluated for expression of IDO and the number of Forkhead box p3 (FOXP3)-expressing regulatory T cells. Moderate to strong cytoplasmic IDO expression was present in all (15/15) MM lymph node metastases in patients with poor survival. Eight of 10 patients with metastatic MM and long survival were negative or only weakly positive for IDO. Upregulation of IDO in metastatic MM cells was associated with an increased number of regulatory T cells (Tregs). There was a statistically significant association between shorter survival and both a stronger IDO expression (p = 0.0019) and a higher number of FOXP3 expressing Tregs (p < 0.001). Using RT-PCR analysis, we showed that IDO expression in MM cells is induced by interferon-gamma. These data support the notion that metastatic MM cells select for expression of IDO to evade immunologic detection. Therefore, inhibition of IDO in MM patients may be a useful treatment strategy.