Background: Ketoconazole is an imidazole derivative employed for topical delivery and treating fungal infections and acne. Ketoconazole (KET) prevents ergosterol synthesis, increases membrane fluidity, and prevents fungal growth. Conventional antifungal medication has side effects for topical delivery, including itching, burning, reduced permeation, stinging, and poor bioavailability.  The drawbacks and side effects of conventional topical formulations shifted the focus to formulating a nanosponges-based gel of Ketoconazole. The present research aimed to develop a Ketoconazole nanosponges-based gel for topical delivery. The formulated preparation will help improve side effects, retention time, solubility, bioavailability, and permeability. Methodology: KET nanosponges were fabricated using the emulsion solvent evaporation method. The prepared formulations were characterized for particle size, zeta potential, PDI, % DEE (drug entrapment efficiency), viscosity, and in vitro drug diffusion studies. Optimized formulation F6 containing Ketoconazole (100mg): E.C. (300mg), having stirring speed 1000rpm, internal phase volume 10ml (D.C.M.) showed promising results. Further optimized formulation F6 was incorporated into the gel base matrix of Carbopol 934 with different excipients. Fungal strains of Candida albicans were selected for the study using the agar plate method. In vivo studies of optimized formulation (F6) showed better results compared to the marketed formulation against C. albicans, and toxicity was reduced.Results: The prepared gel of Carbopol containing KET nanosponges met all physical characteristics and showed promising antifungal effects by inhibiting fungal growth. The zone of inhibition was measured and showed promising effects against C. albicans compared to the marketed formulation. Conclusion: The gel was highly effective against fungal strains and showed promising in vivo antifungal activity against C. albicans (ZOI: 11±0.89mm) in a dose-dependent manner compared to the marketed formulation (ZOI: 9±1.41mm). It further requires more research for topical delivery and to be involved in clinical trials.