Abstract. The present study was aimed at synthesizing an imidazole-based ionic liquid 1-butyl-3-methylimidazolium bromide (BMIMBr) and subsequent development of a novel ionic liquid-in-oil (IL/o) microemulsion (ME) system for dermal delivery of a poorly permeating drug 5-fluorouracil (5-FU). A significant enhancement in the solubility of 5-FU was observed in BMIMBr. IL/o MEs of 5-FU were prepared using isopropyl myristate, Tween 80/Span 20, and BMIMBr. Results of ex vivo skin permeation studies through mice skin indicated that the selected IL/o ME exhibited 4-fold enhancement in percent drug permeation as compared to aqueous solution, 2.3-fold as compared to hydrophilic ointment, and 1.6-fold greater permeation than water in oil (w/o) ME. The results of in vivo studies against dimethylbenz(a)anthracene (DMBA)/12-O-tetradecanoylphorbol-13-acetate (TPA)-induced mice skin carcinogenesis demonstrated that the IL/o ME could effectively treat skin cancer in 4 weeks. In addition, the side effects such as erythema and irritation associated with the conventional formulations were not observed. Histopathological studies showed that the use of IL/o ME caused no anatomic and pathological changes in the skin structure of mice. These studies suggest that the use of IL-based ME system can efficiently enhance the solubility and permeability of 5-FU and hence its therapeutic efficacy.KEY WORDS: 5-fluorouracil; dermal delivery; ionic liquids; ionic liquid in oil (IL/o) microemulsion; skin cancer.