Lip licking is a type of dog communication. A dog who licks his lips is using body language to let you know how he's feeling.
What It Is
Lip licking is just what it sounds like, a dog licking his lips. If you notice a dog is licking his lips when there's no food involved, he's trying to send you a message.
What It Means
Dog trainer and behaviorist Turid Rugaas coined the phrase "calming signals" to refer to lip licking and similar dog behaviors. Lip licking is also often referred to as an appeasement gesture. What it all boils down to is that dogs who are licking their lips feel stressed or uncomfortable about something going on around them that they perceive as a threat.
Dogs lick their lips to appease, or soothe, a person or animal they perceive as a threat in order to ward off aggression. An example of this can be seen in dogs who are scolded when their owners return home after being gone all day only to find the dog has had an accident in the house. A dog might not connect the scolding to relieving himself indoors, but instead sees his owner as a threat. The owner may be yelling and looming over him, and so the dog offers an appeasement gesture by licking his lips and averting his gaze. This is the dog's way of saying that he isn't a threat to the person or animal behaving in an aggressive manner.
While lip licking is usually considered a submissive gesture meant to prevent aggression from escalating, it is still a sign that a dog is stressed and uncomfortable with a situation. This gesture of appeasement may be a dog's first attempt to stop aggressive behavior (i.e. to stop his owner from yelling at him), but this does not mean that the dog won't become defensive if the aggressive behavior continues. So if you see a dog licking his lips, back off. This will allow him some space to get more comfortable, and at the same time, it can save you from a potential bite from a dog who feels the need to defend himself.