<p>Prednisolone (PRD) is known for its anti-inflammatory effect on the skin. The study aimed to encapsulate PRD into niosomes and then load them into thermo-responsive <i>in situ</i> gels for skin inflammation to enhance drug stability, skin permeability, and patient compliance while minimizing systemic exposure. PRD was encapsulated into non-PEGylated and PEGylated niosomes and then loaded into thermo-responsive <i>in situ</i> gels. The non-PEGylated PRD niosomes exhibited a particle size (PS) of 354.3 ± 1.9 nm, a polydispersity index (PDI) of 0.3 ± 0.0, and a ζ-potential of - 19.4 ± 1.0 mV. While the PEGylated attained PS, PDI, and ζ-potential of 314.9 ± 4.2 nm, 0.1 ± 0.0, and - 34.6 ± 2.2 mV, respectively. In addition, PEGylated niosomes exhibited higher entrapment efficiency and drug loading than non-PEGylated niosomes. The loading of the non-PEGylated and PEGylated PRD niosomes into thermo-responsive <i>in situ</i> gel showed a phase transition (T_sol→gel) at 34.1 ± 0.4 and 33.2 ± 0.9°C, respectively. The <i>in situ</i> gels showed a pseudoplastic flow with viscoelastic properties. The PRD niosomes and their corresponding <i>in situ</i> gels were biocompatible against human gingival fibroblasts. A decrease in rat paw inflammation was observed after applying the PRD niosomal gels. Stability studies for 3&#xa0;months at 4°C showed that the PEGylated PRD niosomes and their corresponding <i>in situ</i> gel were more stable than the non-PEGylated PRD niosomes and their corresponding <i>in situ</i> gel. In conclusion, PEGylated PRD niosomal <i>in situ</i> gel demonstrated superior stability and sustained release, making it a promising candidate for topical corticosteroid therapy.</p> Graphical Abstract <p></p>