Background: Inducible T cell costimulator ICOS is an emerging target in immuno-oncology. The aim of this study was to investigate the epigenetic regulation of ICOS in melanoma by DNA methylation.Methods: We comprehensively investigate ICOS DNA methylation of specific CpG sites and expression pattern within the melanoma microenvironment with regard to immune correlates, differentiation, clinical outcomes, and immune checkpoint blockade (ICB) response.Results: Our study revealed a sequence-contextual CpG methylation pattern consistent with an epigenetically regulated gene. We found a cell type-specific methylation pattern and locus-specific correlations and associations of CpG methylation with ICOS mRNA expression, immune infiltration, melanoma differentiation, prognosis, and response to ICB. High ICOS mRNA expression was identified as a surrogate for enriched immune cell infiltration and was associated with favorable overall survival (OS) in non-ICB-treated patients and predicted response and a prolonged progression-free survival (PFS) following ICB therapy initiation. ICOS hypomethylation, however, significantly correlated with poor OS in non-ICB patients but predicted higher response and prolonged PFS and OS in ICB-treated patients. Moreover, we observed cytoplasmic and sporadically nuclear tumor cell-intrinsic ICOS protein expression. Tumor cell-intrinsic ICOS protein and mRNA expression was inducible by pharmacological demethylation with decitabine.Conclusion: Our study identified ICOS DNA methylation and mRNA expression as promising prognostic and predictive biomarkers for immunotherapy in melanoma and points towards a hitherto undescribed role of ICOS in tumor cells.