Errors can occur in measuring blood content and oxygenation in subjects with significant skin pigmentation using reflectance spectrophotometry. The melanin in the epidermis not only reduces the amount of back-scattered light, but also has a characteristic absorption spectrum that varies between individuals. Skin color is primarily influenced by the concentration of melanin, blood content and oxygenation in the superficial microvasculature. A three-step process was developed empirically to accommodate the effect of melanin in the absorption spectrum of skin. A melanin index was developed and applied for each individual tested. Spectral components attributable specifically to melanin were subtracted from the measured spectrum, and its amplitude was normalized. This technique was tested with 26 able-bodied subjects with different levels of skin pigmentation. The melanin-compensated spectra from pigmented and caucasian skin were indistinguishable and no correlation was found between calculated values for indices of blood content and oxygenation, and melanin index.