Previous work has shown that infusion flow rates can be increased by an order of magnitude by partially retracting microneedles after insertion into the skin. This study sought to determine the mechanism by which retraction increases fluid infusion by piercing human cadaver skin with single microneedles, fixing the skin after retracting microneedles to different distances, and examining skin microstructure by histology. We found that microneedle insertion to 1080 μm from the skin surface resulted primarily in skin indentation and only 100–300 μm penetration into the skin. This caused significant compaction of the skin, which probably pressed out most water and thereby dramatically lowered the flow conductivity of skin beneath the needle tip. Retraction of the microneedle allowed the skin to recoil back toward its original position, which relieved the skin compaction and increased local flow conductivity. Altogether, these results suggest that microneedle insertion to penetrate into the skin followed by microneedle retraction to relieve skin compaction is an effective approach to infuse fluid into the skin in a minimally invasive manner.