Melanoma may be difficult to identify histologically and relatively high rates of misdiagnosis leads to many malpractice claims. Currently separation of melanomas from nevi is based primarily on light microscopic interpretation of hematoxylin and eosin stained sections with limited assistance from immunohistology. To increase the accuracy of discrimination of benign and malignant melanocytic lesions we identified DNA microarray-derived gene expression profiles of different melanocytic lesions and evaluated the performance of these gene signatures as molecular diagnostic tools in the molecular classification and separation of melanomas and nevi. Melanocyte-derived cells were isolated by laser capture microdissection from 165 formalin-fixed and paraffin-embedded melanocytic nevi and melanoma tissue sections. RNA was isolated, amplified, labeled, and hybridized to a custom DNA microarray. In all 120 samples were used to identify differentially expressed genes and generate a gene expression classifier capable of distinguishing between melanomas and nevi. These classifiers were tested by the leave-one-out method and in a blinded study. RT-PCR verified the results. Unsupervised hierarchical clustering identified two distinct lesional groups that closely correlated with the histopathologically identified melanomas and nevi. Analysis of gene expression levels identified 36 significant differentially expressed genes. In comparison with nevi, melanomas expressed higher levels of genes promoting signal transduction, transcription, and cell growth. In contrast, expression of L1CAM (homolog) was reduced in melanomas relative to nevi. Genes differentially expressed in melanomas and nevi, on the basis of molecular signal, sub classified a group of unknown melanocytic lesions as melanomas or nevi and had high concordance rates with histopathology. Gene signatures established using DNA microarray gene expression profiling can distinguish melanomas from nevi, indicating the feasibility of using molecular classification as a supplement to standard histology. Our successful use of a standard formalin-fixed and paraffin-embedded tissue further supports the practicability of combining molecular diagnostic testing with histopathology in evaluation of difficult melanocytic lesions.