Melanocytic nevi are benign proliferations of pigment cells that can occasionally develop into melanomas. There is a significant correlation between increased nevus numbers and melanoma development. Our previous reports revealed that 7,12-dimethylbenz(a)anthracene (DMBA) and 12-O-tetradecanoyl-phorbol-13-acetate (TPA) induced dysplastic nevi in C3H/HeNmice, with a potential to transform intomelanomas. To understand the immune mechanisms behind this transformation, we applied increasing DMBA doses followed by TPAto the skin of C3H/HeNmice. Weobserved that increased doses of DMBA correlated well with increased numbers of nevi. The increased DMBA dose induced diminished immune responses and promoted the expansion of regulatory T cells (Treg) that resulted in increased IL10 and reduced IFNγ levels. Mice with increased nevus numbers had loss of p16 expression. These mice had increased migration of melanocytic cells to lymph nodes (LN) and a greater percent of LNs produced immortalized melanocytic cell lines. DMBA-induced immunosuppression was lost in CD4-knockout (KO) mice. Lymphocytes in the CD4KO mice produced less IL10 than CD8KO mice. Furthermore, CD4KO mice had significantly reduced nevus numbers and size comparedwithwild-type and CD8KO mice. These results suggest that Tregs play a vital role in the incidence of nevi and their progression to melanoma.