Al-Qaeda linked militants, in control of large swathes of territory in Yemen's southern and eastern provinces, have infiltrated the city.
They lurk in the shadows by night, harassing young couples strolling on the beaches and often launch deadly attacks against security forces.
Aden is barely a 30 minute drive from Zinjibar, the capital of Abyan province which was taken over by Al-Qaeda militants in May last year.
In Zinjibar and at least five other cities in the region, Al-Qaeda in the Arabian Peninsula (AQAP), considered by the United States as the network's most deadly and active branch, rules supreme.
This week, US officials announced they had thwarted a plot hatched by AQAP to blow up a US-bound airliner. The plan was uncovered by a double agent who infiltrated the network and volunteered for the suicide attack.
Aden's governor, Wahid Rashid, admits Al-Qaeda's local affiliates, known as the Partisans of Sharia (Islamic law), have "infiltrated" the city, but argues the state remains firmly in control.
The city's residents tell a different story.
"The moment you leave your house you feel unsafe," said local resident Shadiah Haidar. "Young people stop you on the road and threaten you for money. There is no security...it's a lost cause."
She says when they call for the police, "they never come."
Haidar is a resident of Al-Muallah, one of Aden's largest districts and home to tens of thousands of people. Police dare not enter this area. If they do, residents say, clashes with the shadowy gunmen are sure to erupt.
The local militias have blocked off the main road into the district with rocks and fallen electric poles. It is not always entirely clear who these gunmen are or what they want.
"In Al-Muallah, it's a real mixed group...We have Al-Qaeda, thugs and southern separatists, and all of them are armed," said resident and local journalist Abdullah Sharafi.
In recent weeks, Al-Qaeda's black flag has been seen flying in the area, though it was quickly taken down. Al-Qaeda graffiti is spray-painted on some of the city's walls.
In another district, Al-Mansoura, the security situation is no less dangerous, though the militias are well-known. It is the armed separatist youths that are in charge here.
They demand total independence from the central government in Sanaa and will accept nothing less.
Al-Mansoura is divided into blocks, each with its own military commander who oversees a group of gunmen. They patrol the streets at night. They guard public buildings and private businesses. They even claim to keep Al-Qaeda's footsoldiers in the area at bay.
"There is no state control so we have to fend for ourselves," said 35-year-old Nizar Ahmad, a member of the district's separatist youth movement.
He says Al-Qaeda has "sleeper cells" in the district and that armed youths regularly catch operatives trying to "distribute materials, including CDs and flyers," promoting the establishment of an Islamic emirate in south Yemen.
Ahmad's colleague, Mohammad al-Yazidi, a 25-year-old doctor and a member of the youth group, says Yemeni police have not entered their district "in about a year."
The separatists don't trust the government and believe that former president Ali Abdullah Saleh and his clan still control the security forces.
At least five army tanks stand watch on the outskirts of Al-Mansoura, the gun barrels pointed in the direction of district. "What kind of government points tanks at its people?" asked Yazidi.
Many of Aden's southern separatists rejected the elections that brought President Abdrabuh Mansur Hadi, himself a southerner, to power after the Gulf-sponsored and UN-backed transition plan forced Saleh's ouster after 33-years of autocratic rule.
Hadi was the only candidate in February's vote. He will lead Yemen for an interim two-year period after which contested presidential and parliamentary elections will be held.
Governor Rashid meanwhile argues that Aden's lawlessness and deteriorating security situation mimics that of the rest of the country and is a "natural" result of last year's Arab spring style uprising in Yemen.
"We are transitioning from one regime to another, from one authority to another," he said, admitting that "people in Aden are afraid."
He says criminality is on the rise and concedes that only "a third" of the police needed in the streets are active.
In the meantime, Al-Qaeda is taking advantage of the absence of the state and is expanding its influence.
The deteriorating situation is stoking "real fear in Washington" over the group's ability to launch an attack on the US, particularly since the "bomb-maker is still alive and is brilliant," said Al-Qaeda expert and Middle East analyst Bruce Riedel of the Washington-based Brookings Institution.
Like most of the leading operatives in Al-Qaeda's Yemen branch, bomb-maker Ibrahim Al-Asiri, a Saudi national, is believed to be hiding somewhere between Abyan and neighbouring Shabwa province where the Yemeni military is still struggling to regain control.