Dimethyl sulfoxide (DMSO) is a highly polar, aprotic solvent with exceptional skin penetration properties, making it a valuable ingredient in the formulation of topical pharmaceutical products. This chapter reviews the formulation strategies, advantages, and challenges associated with DMSO-based topical drug delivery systems. DMSO enhances percutaneous absorption of both hydrophilic and lipophilic drugs by disrupting stratum corneum lipid architecture and proteins while facilitating transdermal drug transport. Its compatibility with a broad range of active pharmaceutical ingredients (APIs) and excipients enables diverse formulation approaches, including gels, creams, and ointments. However, formulation challenges such as potential disruption of surfactant action and odor require careful excipient selection and optimization of DMSO concentration to balance benefits with physical stability. Overall, DMSO remains an effective and useful excipient in topical drug development, offering significant advantages for enhancing API solubiltiy and dermal and transdermal drug delivery.