Recent outstanding research has rapidly revealed new aspects of the biology, etiology, and clinicopathology of Merkel cell carcinoma, a rare but highly aggressive neuroendocrine skin malignancy that affects the elderly and immunosuppressed patients. Molecular biological studies, especially the discovery of Merkel cell polyomavirus, have shed new light on the pathogenesis of the disease. Increasing evidence strongly suggests that this virus is causally related to the development of Merkel cell carcinoma. On the other hand, many studies have also indicated that a subset (approximately 20%) of Merkel cell carcinomas are not likely to be associated with the virus. Tumors with and without the virus have been shown to be significantly different in prognosis, oncogene expression, and histologic appearance, suggesting that they have different etiologies. Moreover, studies on the histopathology, immunohistochemistry, and cytogenetics have revealed several biological factors that are related to the clinical behavior and prognosis of the disease. This review summarizes the advances in the molecular biology of Merkel cell carcinoma based on recent study results. Although the exact molecular pathway of the pathogenesis of Merkel cell carcinoma remains unclear, further understanding of the pathophysiology of this tumor is expected to result in novel therapeutic approaches for management of the disease and contribute to better patient outcomes.