Background: Firearms are the most commonly used weapon to commit homicide in the U.S. Virtually all firearms enter the public marketplace through a federal firearms licensee (FFL): a store or individual licensed by the federal government to sell firearms. Whether FFLs contribute to gun-related homicide in areas where they are located, in which case FFLs may be a homicide risk factor that can be modified, is not known. Methods: Annual county-level data (1993–1999) on gun homicide rates and rates of FFLs per capita were analyzed using negative binomial regression controlling for socio-demographic characteristics. Models were run to evaluate whether the relation between rates of FFLs and rates of gun homicide varied over the study period and across counties according to their level of urbanism (defined by four groupings, as below). Also, rates of FFLs were compared against FS/S – which is the proportion of suicides committed by firearm and is thought to be a good proxy for firearm availability in a region – to help evaluate how well the FFL variable is serving as a way to proxy firearm availability in each of the county types of interest. Results: In major cities, gun homicide rates were higher where FFLs were more prevalent (rate ratio [RR] = 1.70, 95% CI 1.03–2.81). This association increased (p < 0.01) from 1993 (RR = 1.69) to 1999 (RR = 12.72), due likely to federal reforms that eliminated low-volume dealers, making FFL prevalence a more accurate exposure measure over time. No association was found in small towns. In other cities and in suburbs, gun homicide rates were significantly lower where FFLs were more prevalent, with associations that did not change over the years of the study period. FFL prevalence was correlated strongly (positively) with FS/S in major cities only, suggesting that the findings for how FFL prevalence relates to gun homicide may be valid for the findings pertaining to major cities but not to counties of other types. Conclusion: Modification of FFLs through federal, state, and local regulation may be a feasible intervention to reduce gun homicide in major cities.