In this study, aloe-emodin (AE) was less cytotoxic to human noncancerous skin cells (premalignant keratinocytic HaCaT and fibroblast Hs68) than to nonmelanoma cancer cells (epidermoid carcinoma A431 and head and neck squamous cell carcinoma SCC25). Notably, AE induced apoptosis by up-regulating tumor necrosis factor-α and Fas ligand and their cognate receptors, downstream adaptor TNF-R1-associated death domain and Fas-associated death domain, and activated caspase-8 in A431 and SCC25 cells. Moreover, AE up-regulated p53, increased intracellular reactive oxygen species levels, depleted intracellular-reduced GSH, up-regulated cytochrome c and Bax, down-regulated Bcl-2, and activated caspase-9 and -3. The combinatory use of AE and 5-fluorouracil (5-Fu) achieved significantly more cell death in A431 and SCC25 cells than only the use of AE or 5-Fu, likely via regulation of caspase-8, -9, and -3 expressions. Incorporating AE into the liposomal formulation accelerated cell death of A431 and SCC25 cells within a short time. Furthermore, skin permeation profiles of drug suggest that the liposomal formulation enhances transdermal delivery of AE. Experimental data demonstrate the feasibility of applying liposome to deliver AE in clinical therapy.