BACKGROUND Exorex lotion is a novel formulation of prepared coal tar indicated for the treatment of psoriasis. OBJECTIVE To compare the efficacy and tolerability of 1% prepared coal tar lotion versus 5% coal tar extract in patients with mild to moderate plaque psoriasis. METHODS This was a double-blind, randomised controlled study. Patients initially entered a 7-day washout period, during which they applied a yellow soft paraffin plus emulsifying wax ointment used as an emollient three times a day to their plaques. They were then randomised to receive treatment with 1% coal tar (Exorex) lotion or 5% conventional coal tar lotion (Alphosyl), three times a day for 12 weeks. Both treatment groups continued to apply the emollient throughout the duration of the study. Two target plaques were selected at entry for assessment. The clinical measures used were: 1) Total Sign Score (TSS), the sum of 5-point rating scores for erythema, induration and scaling averaged for the two target plaques (range 0-12), 2) the Psoriasis Area and Severity Index (PASI), and 3) patient and investigator 7-point global assessments of improvement at 12 weeks. Patients were assessed at 0, 4, 8 and 12 weeks during the treatment period or at the point of withdrawal. Spontaneously reported and observed adverse events were noted. RESULTS Three hundred and twenty four of 338 randomised patients were evaluable (ITT analysis): 158 patients received 1% coal tar lotion and 166 patients received conventional coal tar. Both groups showed decreases from baseline to end of treatment in mean TSS (decrease of 2.4 points from 5.6 to 3.2 with 1% coal tar lotion and 1.8 points from 5.5 to 3.7 with conventional coal tar), and mean PASI (decrease of 2.4 points with 1% coal tar lotion and 1.5 points with conventional coal tar). Two hundred and twenty eight patients completed the full course of treatment. There was a statistically significant treatment difference in the percentage change in mean TSS at week 12, in favour of 1% coal tar lotion (-10.6%, 95% CI -20.6% to -0.5%, p=0.04). There was also a difference between treatments in the change in mean PASI in favour of 1% coal tar that was of borderline statistical significance (-11.7%, 95% CI -23.8% to 0.4%, p=0.06). Investigator global assessments also favoured 1% coal tar lotion (38% vs. 27% of patients showed clearance or marked improvement). The 1% coal tar lotion had a similar safety profile to 5% conventional coal tar lotion with the majority of treatment-related events being mild to moderate in severity. CONCLUSIONS 1% coal tar lotion is more effective than a conventional coal tar lotion in mild to moderate psoriasis and may be preferred for first-line topical treatment.