Merkel cell carcinoma (MCC) is an aggressive skin malignancy with a high mortality rate and an increasing incidence. The recent discovery of Merkel cell polyomavirus has revolutionized our understanding of MCC pathogenesis. Viral oncoproteins appear to play a critical role in tumor progression and are expressed in the majority of MCC tumors. Virus-specific humoral and cellular immune responses are detectable in MCC patients and are linked to the natural history of the disease. Despite persistent expression of immunogenic viral proteins, however, MCC tumors are able to evade the immune system. Understanding of the mechanisms of immune evasion employed by MCC tumors is rapidly increasing and offers opportunities for development of rational immune therapies to improve patient outcomes. Here we review recent discoveries in MCC with a special focus on the pathogenic role of Merkel cell polyomavirus and the immunobiology of this virus-associated disease.