Topical pain relief compositions include a cannabinoid, terpenoid, and skin penetration system that includes dimethyl sulfoxide (DMSO) and at least one compatibilizer. The composition may be in the form of an emulsion that contains water and at least one fatty component. The composition can be used to reduce or eliminate pain by direct topical application to an affected part or region of the body. A method of treating pain may include direct topical application of the composition to a joint, ligament, muscle, tendon, or disk. The composition penetrates through the skin to provide localized pain relief where applied and provides a quantity of cannabinoid in the region of the pain instead of distributing the cannabinoid systemically and/or to the brain or central nervous system. The composition may be applied by rubbing or massaging at the treatment site and/or by a bandage, patch or other barrier layer.