RATIONALE: Interferon alfa may interfere with the growth of cancer cells. It is not known whether giving high-dose or low-dose interferon alfa is more effective than no further therapy in treating patients with stage III melanoma.

PURPOSE: Randomized phase III trial to compare the effectiveness of high- or low-dose interferon alfa with that of no further therapy following surgery in treating patients who have stage III melanoma.

OBJECTIVES: I. Evaluate the time to distant metastasis, death due to melanoma, and overall survival in patients with high-risk stage III melanoma treated with 10 MU of interferon alfa (IFN-A) for 4 weeks followed by 1 year of IFN-A at 10 MU three times per week vs. 2 years of IFN-A at 5 MU three times per week vs. observation alone. II. Assess the toxicity associated with IFN-A. III. Compare the quality of life, costs, and compliance associated with each treatment regimen.

OUTLINE: Randomized study. Following definitive surgical resection, patients are randomly assigned in a 2:2:1 ratio to Arms A, B, and C, respectively. Arm A: Biological Response Modifier Therapy. Interferon alfa-2b (Schering), IFN-A, NSC-377523. Higher dose. Arm B: Biological Response Modifier Therapy. IFN-A. Lower dose. Arm C: Control. Observation.

PROJECTED ACCRUAL: A total of 1,000 patients will be entered over approximately 4 years in this multicenter study.

DISEASE CHARACTERISTICS: Cutaneous melanoma in one of the following categories: T4, N0, M0 Deep primary tumor with Breslow depth greater than 4.0 cm Tx, N1, M0 Primary tumor with regional lymph node metastases found at lymphadenectomy but clinically undetectable Tx, N2, M0 Clinically apparent regional lymph node metastases (synchronous or metachronous) confirmed by lymphadenectomy Definitive surgical resection and lymphadenectomy with pathologically confirmed adequate surgical margins required Minimum 2 cm margin for primary lesions with Breslow depth greater than 2 mm Distal interphalangeal amputation required for subungual melanomas No primary melanoma originating apart from the skin No multiple in transit metastases in an extremity No lymph node involvement outside the operative area resected by radical neck, axillary lymph node, or ilioinguinal dissection

PATIENT CHARACTERISTICS: Age: 16 to 75 Performance status: ECOG 0 or 1 Hematopoietic: WBC at least 4,000 Platelets at least 125,000 Hemoglobin at least 9.8 g/dL (6.1 mmol/L) Hepatic: Bilirubin no greater than 2 times normal AST no greater than 2 times normal Renal: Creatinine no greater than 1.6 mg/dL (140 micromoles/L) Cardiovascular: No ventricular or supraventricular arrhythmia requiring treatment No congestive heart failure (NYHA class 3/4 status) Other: No uncontrolled infection No requirement for ongoing steroids, NSAIDs, or other immunomodulators No organic brain syndrome or significant impairment of basal cognitive function No psychiatric disorder that would preclude study participation or would be exacerbated by study therapy (e.g., depression) No second malignancy except: In situ cervical cancer Nonmelanomatous skin cancer No pregnant or nursing women

PRIOR CONCURRENT THERAPY: No prior treatment on this protocol for patients with recurrent melanoma at regional lymph nodes No preoperative infusion or perfusion therapy Biologic therapy: No prior adjuvant immunotherapy Chemotherapy: No prior adjuvant systemic chemotherapy No prior anthracyclines Endocrine therapy: Not specified Radiotherapy: No prior adjuvant radiotherapy Surgery: See Disease Characteristics