Research has found that patients survive much longer on the drug than those given conventional chemotherapy.
The one-year survival rate was 73 per cent for those on nivolumab compared with 42 per cent for chemotherapy.
Nivolumab targets and blocks a protein called PD-1 on the surface of certain immune cells called T-cells. Blocking PD-1 activates T-cells to find and kill cancer cells.
Nice has previously rejected the drug for patients with advanced lung cancer.
One study found that patients with non-small cell lung cancer treated with nivolumab lived an average of 12.2 months, while patients treated with a chemotherapy drug lived an average of 9.4 months.
Professor Carole Longson from Nice said: “We are pleased to be able to recommend nivolumab for treating advanced skin cancer in final draft guidance.
“In 2011, over 13,000 people were diagnosed with melanoma in the UK, and it accounts for more deaths than all other skin cancers combined. I am sure this will be welcome news to patients and healthcare professionals alike.”
Johanna Mercier, general manager of Bristol-Myers Squibb in the UK, which makes the drug, said: “We welcome today’s decision from Nice, which is positive news for melanoma patients in the UK.
“However, we are mindful that lung cancer patients continue to await a final decision on this medicine.
“Recently, Nice issued draft guidance, which does not recommend nivolumab in advanced lung cancer. Its final guidance for these patients will be issued in May 2016.”