Sexual signalling is predicted to shape the evolution of sex-specific ornamentation, and establishing the costs and benefits of ornamentation and the information that ornamentation provides to receivers is necessary to evaluating this adaptive function. Here, we assessed the adaptive function of a common colour ornament in insects, melanin wing ornamentation, using the dragonfly Pachydiplax longipennis. We hypothesized that greater ornamentation would improve territory-holding success by decreasing aggression that males receive from territorial rivals, but that more ornamented males may have shorter lifespans. Using mark–recapture field observations, we found that more ornamented males had greater territory-holding success and that viability selection did not act on wing melanization. We then compared the aggression of territorial rivals to decoy males before and after experimentally augmenting wing melanization, finding that males significantly reduced aggression following the manipulation. We next hypothesized that wing melanization would signal fighting ability to territorial rivals by reflecting condition via investment in the costly melanin synthesis pathway. We observed a positive relationship between ornamentation and the likelihood of winning territorial disputes, suggesting that wing melanization provides information about fighting ability to rivals. We also found a positive relationship between melanin-based immune defence and ornamentation, supporting a link between the signal and condition. We conclude that wing melanization is a condition-related signal of fighting ability and suggest that this may be a common mechanism promoting the evolution of melanin ornamentation.