The topical application of tretinoin is a well-established approach to the treatment of acne vulgaris. However, induced inflammation, clinically addressed as a "flare-up", is a major drawback. Recently, clinical and experimental investigations have hinted at a better tolerability, with equal efficacy, if the active compound is liposomally encapsulated. Using epidermis reconstructed in vitro, we compared the morphological changes upon topical application of a liposomal form (0.05% and 0.025%) and conventional form (0.05%) light and electron microscopically. After 24 h several remarkable changes of the stratum corneum with all treatment modalities, representing inhibition of keratinisation wanted in acne vulgaris, were seen. When preparations of equal strength, i.e. 0.05%, were compared, the changes representing toxic dermatitis in the epidermis were more marked with the conventional form. Epidermis reconstructed in vitro treated with the liposomal forms showed no significant differences due to either concentration. It is suggested that these changes correspond to the flare-up on clinical grounds. The in vitro findings further corroborate the hypothesis that liposomal encapsulation can increase the benefit/risk ratio of an active compound applied to the skin.