Background: Merkel cell carcinoma (MCC) is a cutaneous neuroendocrine neoplasm with propensity for lymphatic spread. The rarity of MCC has limited analysis of factors associated with a positive sentinel lymph node biopsy (SLNB) and survival. Methods: Review of a prospective MCC database was performed. Factors associated with SLNB positivity were analyzed. Univariate and multivariate analyses of factors associated with recurrence and survival were performed using the cumulative incidence (CI) function, treating death from other causes as a competing risk. Results: From 1996 to 2010, a total of 153 patients with localized MCC underwent SLNB, of whom 45 (29%) were positive. Factors associated with SLNB positivity were primary tumor size (25% ≥2 cm vs. 45% >2 cm; P = 0.02) and presence of lymphovascular invasion (LVI) (55% LVI positive vs. 4% LVI negative; P < 0.01). SLNB-positive patients were more likely to receive radiation or chemotherapy (60% vs. 7%, P < 0.01). With median follow-up of 41 months, there were 16 nodal/distant recurrences (10%), 11 deaths from MCC (7%), and 27 death from other causes (18%). The 2-year CIs of recurrence or death from MCC were 12% and 6%, respectively. There was no difference in recurrence or death from MCC between SLNB-positive and -negative patients. The 2-year CIs of recurrence or death from MCC for LVI-positive patients were 30% and 15%, respectively. No LVI-negative patient experienced recurrence of disease or died of MCC. Discussion: SLNB identifies occult nodal metastases in 29% of patients with localized MCC. Predictors of SLNB positivity are tumor size and presence of lymphovascular invasion (LVI). Patients with SLNB-positive disease are more likely to receive further treatment; however, sentinel lymph node (SLN) status is not associated with recurrence or survival. In contrast, LVI is strongly associated with both recurrence and survival.