Luteolin, a naturally derived polyphenol, has shown to induce apoptosis in HaCaT cells. Its role in induction of caspase-14 and thus in the terminal differentiation program of the human keratinocytes has also been revealed. Delivery and hence bioavailability of this relatively hydrophobic drug can be enhanced by using a suitable vehicle. Hence liposomal formulations of luteolin with/without polyethylene glycol (PEG) modification were studied for their relative potential in initiating apoptosis in immortalized human keratinocytes. Furthermore, the role of luteolin and its encapsulated versions to induce caspase-3–mediated apoptosis was studied for the first time. Our study showed that PEGylated liposomes carrying luteolin were most effective in inducing caspase-3 and caspase-14 protein expressions in HaCaT cells. Liposomal constructs synthesized were characterized for their size/morphology, polydispersity, and zeta potential. In vitro cytotoxic assessments showed that cytotoxic behavior is purely due to the drug while the liposomal vehicle itself (blank liposomes) showed no cytotoxic behavior. Overall, our results project luteolin delivered via PEGylated liposomes to be effective in inducing caspase-3/caspase-14–mediated cellular cytotoxicity. These findings extend previous studies elucidating the role of luteolin as an effective ethno-derived molecule with a potential to modulate the cell death program of human keratinocytes. © 2018, Springer Science+Business Media, LLC, part of Springer Nature.