The penalty, imposed by the European Commission, is the largest issued under the bloc's Digital Services Act, which requires major online platforms to tackle illegal content and products more effectively.
Following a two-year investigation, the Commission concluded that AliExpress had not fulfilled its legal obligation to "diligently assess" the risks posed by counterfeit, unsafe and prohibited goods sold through its marketplace.
EU technology chief Henna Virkkunen said: "The spread of counterfeit clothing, unsafe toys, dangerous cosmetics and other illegal and harmful products is not an unavoidable cost of shopping online - it is a failure by AliExpress to comply with its obligations."
Investigators found that the platform's automated detection systems failed to identify many illegal products, while items that were flagged often remained available for weeks before being removed. The Commission also said AliExpress did not adequately penalise sellers repeatedly offering prohibited products and that its compliance checks could be "easily circumvented".
AliExpress, owned by Chinese technology group Alibaba Group, serves around 193 million users across Europe, making it larger in the region than rivals Shein and Temu.
The Digital Services Act allows regulators to fine companies up to six per cent of their annual global turnover. While Alibaba reported revenue of approximately €122 billion last year, the Commission opted for a significantly smaller penalty.
AliExpress said it disagreed with the ruling.
The company - which is reviewing the decision and considering its legal options - said: "We disagree with today's decision and the disproportionate fine, which does not adequately reflect our established framework and the significant, proactive enhancements we have made."
Alongside paying the fine, AliExpress must submit a detailed compliance plan to the EU by 20 October outlining how it intends to address the shortcomings identified by regulators.
The decision follows similar enforcement actions under the Digital Services Act, including a €200 million fine imposed on Temu earlier this year over illegal products and a €120 million penalty issued to X in 2025 over deceptive verification practices.
