A fuel dispenser is provided with a nozzle drying function that prevents the refreezing of melted ice buildup upon subsequent uses of the nozzle. The fuel dispenser comprises a housing including a holster. A fuel dispensing nozzle is configured to mate with a holster. A port is configured to direct air into the holster and onto the nozzle. A controller is configured to control flow of the air through the port. The port may be attached to a blower located inside or outside of the dispenser using tubing. Alternatively, the port may be attached to a compressed air assembly. The compressed air assembly may include a pressure regulator configured to control the amount of air produced. A heater may heat the air flowing to the port. A pressure cap including a plurality of openings may be configured to seal the nozzle when the nozzle is mated with the holster.