Water regulation is an important physiological challenge for insects due to their small body sizes and large surface area to volume ratios. Adaptations for decreasing cuticular water loss, the largest avenue of loss, are especially important. The melanin desiccation hypothesis states that melanin molecules in the cuticle may help prevent water loss, thus offering protection from desiccation. This hypothesis has much empirical support in Drosophila species, but remains mostly untested in other taxa, including Lepidoptera. Because melanin has many other important functions in insects, its potential role in desiccation prevention is not always clear. In this study we investigated the role of melanin in desiccation prevention in the white-lined Sphinx moth, Hyles lineata (Lepidoptera, Sphingidae), which shows high plasticity in the degree of melanin pigmentation during the late larval instars. We took advantage of this plasticity and used density treatments to induce a wide range of cuticular melanization; solitary conditions induced low melanin pigmentation while crowded conditions induced high melanin pigmentation. We tested whether more melanic larvae from the crowded treatment were better protected from desiccation in three relevant responses: i) total water loss over a desiccation period, ii) change in hemolymph osmolality over a desiccation period, and iii) evaporation rate of water through the cuticle. We did not find support for the melanin desiccation hypothesis in this species. Although treatment influenced total water loss, this effect did not occur via degree of melanization. Interestingly, this implies that crowding, which was used to induce high melanin phenotypes, may have other physiological effects that influence water regulation. There were no differences between treatments in cuticular evaporative water loss or change in hemolymph osmolality. However, we conclude that osmolality may not sufficiently reflect water loss in this case. This study emphasizes the context dependency of melanin’s role in desiccation prevention and the importance of considering how it may vary across taxa. In lepidopteran larvae that are constantly feeding phytophagous insects with soft cuticles, melanin may not be necessary for preventing cuticular water loss.