We have developed a new computer-aided diagnostic system for differentiating oral borderline malignancies in hematoxylin-eosin stained microscopic images. Epithelial dysplasia and carcinoma in-situ (CIS) of oral mucosa are two different borderline grades similar to each other, and it is difficult to distinguish between them. A new image processing and analysis method has been applied to a variety of histopathological features and shows the possibility for differentiating the oral cancer borderline grades automatically. The method is based on comparing the drop-shape similarity level in a particular manually selected pair of neighboring rete ridges. It was found that the considered similarity level in dysplasia was higher than those in epithelial CIS, of which pathological diagnoses were conventionally made by pathologists. The developed image processing method showed a good promise for the computer-aided pathological assessment of oral borderline malignancy differentiation in clinical practice.