Abstract. The purpose of the present study was to develop an optimal microemulsion (ME) formulation as topical nanocarrier of caffeine (CAF) to enhance CAF skin retention and subsequently improve its therapeutic effect on UVB-induced skin carcinogenesis. The pseudo-ternary phase diagram was developed composing of Labrafil M 1944 CS as oil phase, Cremophor EL as surfactant, tetraglycol as cosurfactant, and water. Four ME formulations at water content of 50, 60, 70, and 80% were prepared along the water dilution line of oil to surfactant ratio of 1:3 and characterized in terms of morphology, droplet size, and electric conductivity. A gel at the same drug loads (1%, w/w) was used as control. Ex vivo skin permeation studies were conducted for ME optimization. The optimized formulation (ME4) was composed of 5% (w/w) Labrafil M 1944 CS, 15% (w/w) Smix (2/1, Cremophor EL and tetraglycol), and 80% (w/w) aqueous phase. The skin location amount of CAF from ME4 was nearly 3-fold higher than control (P<0.05) with improved permeated amount through the skin. The skin targeting localization of hydrophilic substance from ME4 was further visualized through fluorescent-labeled ME by a confocal laser scanning microscope. In pharmacodynamics studies, CAF-loaded ME4 was superior in terms of increasing apoptotic sunburn cells (P<0.05) as compared with control. Overall results suggested that the ME4 might be a promising vehicle for the topical delivery of CAF.