Disorders of hyperpigmentation such as melasma and postinflammatory hyperpigmentation (PIH) are common, particularly among people with darker skin types. Hydroquinone (HQ) bleaching creams are considered the gold standard for treating hyperpigmentation. Recently, a new formulation of HQ 4% with retinol 0.15% entrapped in microsponge reservoirs was developed for the treatment of melasma and PIH. Microsponges were used to release HQ gradually to prolong exposure to treatment and to minimize skin irritation. The safety and efficacy of this product were evaluated in a 12-week open-label study. A total of 28 patients were enrolled, and 25 completed the study. Study end points included disease severity, pigmentation intensity, lesion area, and colorimetry assessments. Adverse events also were recorded. Patients applied the microentrapped HQ 4% formulation to the full face twice daily (morning and evening). A broad-spectrum sunscreen was applied once in the morning, 15 minutes after application of the test product. Patients were evaluated at baseline and at 4, 8, and 12 weeks. The microentrapped HQ 4%/retinol 0.15% formulation produced improvement at all study end points. Improvement in disease severity and pigmentation intensity was statistically significant at weeks 4, 8, and 12 compared with baseline (P<.001). Lesion area and colorimetry measurements also were significantly improved at each visit (P<.001). Microentrapped HQ 4% was well tolerated, with only one patient discontinuing because of an allergic reaction, which was not considered serious. In this open-label study, microentrapped HQ 4% with retinol 0.15% was safe and effective.