Apple trees have a long life, and in that long life you may notice the bark peeling. This may occur for a few reasons, but most of them don't indicate that the tree is severely diseased or dying, even if it's very old. Pruning is one way to remedy the problem, but if you're unfamiliar with proper apple tree pruning techniques, consult your county extension office or call a professional arborist.
Many older trees that have been neglected for several years may develop peeling bark simply because of their age. This doesn't necessarily mean that the tree is diseased in any way. If you want to remedy the peeling bark, prune the tree to open up the crown. Do not remove more than 25 to 30 per cent of the crown in one season, but letting in air and light will help the tree recover its former bark quality.
Some trees may shed their bark as a response to moss, lichen or bark-related pests. Moss and lichen are typical on older trees. Scale insects are one example of such a pest. They attach themselves to the bark and develop an outer coating that is impenetrable to insecticides. The tree may shed its bark to shed the insects. If this is the case, let the tree take care of its business, but continue to keep it watered and fertilised. Strong trees can withstand an attack better than weak trees, and the supplemental water and nutrients will support the tree as it grows new bark.
Botryosphaeria canker is a disease of apple trees that doesn't always exhibit symptoms on the fruit, but almost always is evident on the twigs and limbs. The disease begins as blisters on the bark that appear wet and sunken. Gradually, they fill with a watery fluid and may coalesce to girdle and kill limbs or entire trees. Older cankers may exhibit bark death in the form of peeling; the bark around an established canker may slough off.
It's a good idea to look for other signs of degradation on the tree to determine if any of its parts are dead. Peeling bark at the base of a branch may indicate that the branch has died. Help out the tree by trimming back the branch to living wood, but under no circumstances should you cut into the bark collar, the protrusion where the branch is attached to the trunk.