Tumor-associated macrophages (TAMs) may have an important role in tumor immunity. We studied the activation state of TAMs in cutaneous SCC, the second most common human cancer. CD163 was identified as a more abundant, sensitive, and accurate marker of TAMs when compared with CD68. CD163(+) TAMs produced protumoral factors, matrix metalloproteinases 9 and 11 (MMP9 and MMP11), at the gene and protein levels. Gene set enrichment analysis (GSEA) was used to evaluate M1 and M2 macrophage gene sets in the SCC genes and to identify candidate genes in order to phenotypically characterize TAMs. There was coexpression of CD163 and alternatively activated "M2" markers, CD209 and CCL18 (chemokine (C-C motif) ligand 18). There was enrichment for classically activated "M1" genes in SCC, which was confirmed in situ by colocalization of CD163 and phosphorylated STAT1 (signal transducer and activator of transcription 1), IL-23p19, IL-12/IL-23p40, and CD127. Also, a subset of TAMs in SCC was bi-activated as CD163(+) cells expressed markers for both M1 and M2, shown by triple-label immunofluorescence. These data support heterogeneous activation states of TAMs in SCC, and suggest that a dynamic model of macrophage activation would be more useful to characterize TAMs.