Glycyrrhiza glabra L. has been used in herbal medicine for skin eruptions, including dermatitis, eczema, pruritus and cysts. The effect of licorice extract as topical preparation was evaluated on atopic dermatitis. The plant was collected and extracted by percolation with suitable solvent. The extract was standardized, based on Glycyrrhizinic acid by using a titrimetry method. Different topical gels were formulated by using different co-solvents. After standardizing of topical preparations, the best formulations (1% and 2%) were studied in a double-blind clinical trial in comparison with base gel on atopic dermatitis over two weeks (30 patients in each group). Propylene glycol was the best co-solvent for the extract and Carbopol 940 as gelling agent showed the best results in final formulations. The quantity of glycyrrhizinic acid was determined 20.3% in the extract and 19.6% in the topical preparation. Two percent licorice topical gel was more effective than 1% in reducing the scores for erythema, oedema and itching over two weeks (p<0.05). The results showed that licorice extract could be considered as an effective agent for treatment of atopic dermatitis.