Photoageing resulting from long term exposure of the skin to UV light can be minimized by scavenging the reactive photochemical intermediates with antioxidants. For effective photoprotection, the antioxidant must overcome the barrier properties of the skin and reach the target site in significant amounts. The present study aims to improve the skin penetration of caffeic acid, a very effective free radical scavenger, by encapsulating in liposomes. Caffeic acid loaded liposomes prepared using the reverse phase evaporation technique showed 70% encapsulation efficiency and size around 100 nm with zeta potential of −55 mV. $In\; vitro$ diffusion through a dialysis membrane enabled 70% release of encapsulated caffeic acid within 7 h, whereas 95% of free caffeic acid diffused within 4 h in PBS solution (pH 7.4). Liposomal caffeic acid permeation through pig skin epidermis in a Franz cell apparatus was 45 % during 7 h. In contrast, free caffeic acid was almost nonpermeable (<5%) to pig skin during this time. The DPPH assay indicated that skin penetration did not destroy the antioxidant activity of liposomal caffeic acid or free caffeic acid. In conclusion, we confirm that liposomal caffeic acid may be successfully employed as an effective photoprotective agent against UV mediated skin damage.