Psoriasis is a chronic inflammatory skin disease that is difficult to treat. Quercetin (QT) is a dietary flavonoid known for its antiinflammatory effects and safe use in humans. However, the topical application of quercetin for psoriasis treatment presents a significant challenge due to its poor water solubility and low stability in semisolid preparations, where it tends to recrystallize. This work presents a novel liposome-in-gel formulation for the quercetin-based topical treatment of psoriasis. The quercetin-loading liposomes are stabilized by hydroxypropyl-β-cyclodextrin (HPCD), which interacts with phospholipids via hydrogen bonding to form a layer of an HPCD coating on the liposome interface, thus resulting in improved stability. Various analytical techniques, such as FTIR spectroscopy, Raman spectroscopy, and TEM, were used to characterize the molecular coordination patterns between cyclodextrin and liposomes. The results demonstrated that HPCD assisted the liposomes in interfacing with the matrix lipids and keratins of the stratum corneum, thereby enhancing skin permeability and promoting drug penetration and retention in the skin. The in vivo results showed that the topical QT HPCD-liposome-in-gel improved the treatment efficacy of psoriatic plaque compared to free QT. It alleviated the symptoms of skin thickening and downregulated proinflammatory cytokines, including TNFα, IL-17A, and IL-1β. The results suggested that the HPCD-coordinated liposome-in-gel system could be a stable carrier for topical QT therapy with good potential in psoriasis treatment.