Acquired melanocytic nevi are commonly found in sun exposed and unexposed human skin, but the potential for their transformation into invasive melanoma is not clear. Therefore, a mouse model of nevus initiation and progression was developed in C3H/HeN mice using a modified chemical carcinogenesis protocol. Nevi develop due to DNA damage initiated by dimethylbenz(a) anthracene (DMBA) followed by chronic promotion with 12-O-tetradecanoyl-phorbol-13-acetate (TPA). Dysplastic pigmented skin lesions appeared in 7-9wk with 100% penetrance. Nests of melanocytic cells appeared in a subset of skin draining lymph nodes (dLN) by 25wk, but not in age matched controls. Immunohistochemistry, real-time PCR, and flow cytometric analyses confirmed their melanocytic origin. Transformed cells were present in a subset of nevi and dLNs, which exhibited anchorage-independent growth, tumor development, and metastasis in nude mice. Approximately 50% of the cell lines contained H-Ras mutations and lost tumor suppressor p16Ink4a expression. While most studies of melanoma focus on tumor progression in transgenic mouse models where the mutations are present from birth, our model permits investigation of acquired mutations at the earliest stages of nevus initiation and promotion of nevus cell transformation. This robust nevus/melanoma model may prove useful for identifying genetic loci associated with nevus formation, novel oncogenic pathways, tumor targets for immune-prevention, screening therapeutics, and elucidating mechanisms of immune surveillance and immune evasion.