Segregation of familial cutaneous melanoma has been shown to be compatible with autosomal dominant transmission with incomplete penetrance. However, the combined phenotype of melanoma and a known melanoma-precursor lesion, the dysplastic nevus (DN), has not previously been found to fit a Mendelian model of inheritance using complex segregation analysis. Employing a life-table and disease-free survival analysis approach, we estimated the lifetime incidence of melanoma in the sibs and offspring of DN-affected individuals to be 46%, consistent with a highly penetrant, autosomal dominant mode of inheritance. To further elucidate the relationship between the two traits, we conducted a linkage analysis between the melanoma locus and a hypothetical DN locus, and obtained a maximum lod score of 3.857 at theta = .08. Furthermore, all families giving evidence for linkage were in the coupling phase and the maximum likelihood estimate of theta was not significantly different from 0 (P = .1). This provides evidence that the DN and melanoma traits may represent pleiotropic effects of a single, highly penetrant gene behaving in an autosomal dominant manner.