Different approaches are being used for the topical application of antifungal drugs. Luliconazole (LUL) is one of the antifungal medications that are being used for the treatment of various superficial infections. The poor permeability of LUL is regarded to be a factor for its reduced efficacy. Hence, the current study aimed to develop a nanosponge hydrogel to improve dermal availability and permeability. A set of nanosponge formulations (L1 -L17) were designed with the help of central composite design (Design Expert 13, state ease Inc., Minneapolis, MN, USA). L1 -L17 was prepared by using the emulsion solvent evaporation technique. The nanosponges were characterized for drug-excipient compatibility (FTIR, P-XRD, and DSC), and particle size, polydispersibility index, zeta potential, entrapment efficiency (%EE), and in vitro drug release; further optimized. The optimized nanosponge formulation (OLF) was taken to produce six hydrogels (LF1-LF6) of LUL by varied proportions of the gelling agent. In this process, initially, the gel was constituted with Carbopol 934/ sodium CMC/HPMC. Later, hydrogel texture was evaluated for its viscosity, swelling, and membrane permeability, followed by in vitro drug release and antifungal efficacy. The nanosponge formulations (L1 -L17) had an average particle size of 109 +/- 0.45 to 386 +/- 0.34 nm, entrapment efficiency of 35.45 +/- 0.46- 89.65 +/- 0.37 % with 84.67 +/- 0.5499.65 +/- 0.48 % of drug release for 6 h. The formulation OLF was predicted with better particle size, %EE, and drug release responses at 378 +/- 0.25 nm, 84.65 +/- 0.45%, and 96.18 +/- 0.54% for 4 h. Out of six formulated nanosponge gels (LF1-LF6), LF2 showed an optimal viscosity (25.69 +/- 0.45 pa.S), pH (6.87 +/- 0.56) and % drug release (80.65 +/- 0.64%) in 4 h. Drug release was governed by non-fickian diffusion mechanisms and zero -order. This nanosponge hydrogel was found stable and had a high permeation rate with better retention, which can be compelling enough in topical applications.