Purpose <p>The rising prevalence of skin infections underscores the urgent need for effective and innovative topical treatments. Conventional formulations often face limitations, but colloidal carriers offer a promising solution. This research focused on developing a Nano Structured Lipid Carrier (NLC) gel loaded with 1% (w/v) luliconazole (LCZ) to enhance skin retention, permeability, and topical bioavailability.</p> Methods <p>LCZ-loaded NLCs were prepared and optimized for particle size, zeta potential, and entrapment efficiency. Particle characterization was performed using DLS. In vitro drug release studies were conducted in phosphate buffer (pH 5.4), and drug-excipient interactions were evaluated. Physical properties such as spreadability and extrudability were assessed. Ex vivo skin permeation and retention studies were conducted using rat skin. Antifungal efficacy was determined against a specific fungal pathogen, and a skin irritation study was performed in animal models.</p> Results <p>The optimized NLCs exhibited particle sizes between 18.76 ± 0.15&#xa0;nm and 52.56 ± 1.75&#xa0;nm, high entrapment efficiency, and good physical stability. Sustained drug release was observed without evidence of drug-excipient incompatibility. The NLC-loaded chitosan gel displayed excellent spreadability and extrudability. Compared to a marketed LCZ cream, the NLC gel showed significantly higher drug retention in the epidermis and dermis. Antifungal studies demonstrated potent activity against fungal pathogens. No signs of skin irritation were observed during animal studies, confirming the formulation’s safety.</p> Conclusions <p>The developed LCZ-loaded NLC gel formulation enhances skin retention, prolongs drug release, improves topical bioavailability, and provides superior antifungal efficacy. This could be a promising and safe therapeutic option for managing topical fungal infections.</p> Graphical Abstract <p></p>