Undiagnosed and untreated oral precancerous lesions often progress into malignancies. Photodynamic therapy (PDT) might be a minimally invasive alternative to conventional treatments. 5-aminolevulinic acid (5-ALA) is one of the most commonly used photosensitizers in PDT, and it is effective on many cancer types. However, its hydrophilic characteristic limits cell membrane crossing. In the present study, the effect of a newly formulated gel containing 5% 5-ALA in combination with red light (ALAD-PDT) on a premalignant oral mucosa cell line was investigated. The dysplastic oral keratinocyte (DOK) cells were incubated with ALAD at different concentrations (0.1, 0.5, 1, and 2 mM) at two different times, 45 min or 4 h, and then irradiated for 7 min with a 630 nm LED (25 J/cm2). MTT assay, flow cytometry, wound healing assay, and quantitative PCR (qPCR) were performed. ALAD-PDT exerted inhibitory effects on the proliferation and migration of DOK cells by inducing ROS and necrosis. mRNA analysis showed modulation of apoptosis-related genes’ expression (TP53, Bcl-2, survivin, caspase-3, and caspase-9). Furthermore, there was no difference between the shorter and longer incubation times. In conclusion, the inhibitory effect of the ALAD-PDT protocol observed in this study suggests that ALAD-PDT could be a promising novel treatment for oral precancerous lesions.