Oral cancer is a devastating disease and is commonly preceded by a range of oral premalignant disorders. We investigated the expression of PD-1 and PD-L1 in oral epithelial dysplasia (OED) that progressed to oral squamous cell carcinoma (OSCC) compared to non-progressing dysplasia. 49 oral biopsies were analyzed, including 19 progressing cases, 20 cases did not progress, and 10 OSCC. Samples were stained with monoclonal antibodies for PD-1 and PD-L1, followed by conventional peroxidase reaction immunohistochemistry (IHC) imaged under light microscopy or fluorescent immunohistochemistry (FIHC) imaged using a confocal microscope. Images were analyzed using a novel semi-automated analysis protocol. PD-1/PD-L1 expression was assessed at the epithelium/tumor cells (TC) and at inflammatory cells in lamina propria. Our results show a significant increase in PD-L1 expression in progressing compared to non-progressing dysplasia. Using FIHC, we showed increased PD-L1 expression, increased nuclear density in progressing dysplasia and a better interobserver agreement compared with IHC. We developed a new FIHC-based quantitative method to study PD-1/PD-L1 expression in FFPE samples and showed that PD-L1 is highly expressed in premalignant lesions progressing to cancer. Our results suggest that immunomodulation via PD-L1/PD-1 pathway occurs prior to malignant transformation.