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The aim of the present study was to investigate the potential of nanoemulsion formulation for topical delivery of Clobetasol propionate (CP) using algal oil (containing omega-3 fatty acids) as the oil phase. CP has anti-inflammatory, immunomodulatory and antiproliferative activities. However, its clinical use is restricted to some extent due to its poor permeability across the skin. Algal oil was used as the oil phase and was also exploited for its anti-inflammatory effect along with CP in the treatment of inflammation associated with dermatitis. Nanoemulsion formulations were prepared by aqueous phase titration method, using algal oil, tween 20, PEG 200 and water as the oil phase, surfactant, co-surfactant and aqueous phase respectively. Furthermore, different formulations were subjected to evaluate for ex-vivo permeation and in-vivo anti-inflammatory, irritation and contact dermatitis studies. The optimized nanoemulsion was converted into hydrogel-thickened nanoemulsion system (HTN) using carbopol 971 and had a viscosity of 97.57 ± 0.04 PaS. The optimized formulation had small average diameter (120 nm) with zeta potential of -37.01 mV which indicated good long-term stability. In-vivo anti-inflammatory activity indicated 84.55% and 41.04% inhibition of inflammation for drug loaded and placebo formulations respectively. The assessment of skin permeation was done by DSC and histopathology studies which indicated changes in the structure of epidermal membrane of skin. Contact dermatitis reveals that the higher NTPDase activity in the treatment with the CP-loaded nanoemulsion could be related to the higher anti-inflammatory effect in comparison with placebo nanoemulsion gel.