Benzoyl peroxide (BPO) is generally considered as first line treatment against acne. Low water solubility and formation of larger clusters and limited skin permeation upon topical application necessitates the application of high amount of drug for desired action which leads to induction of skin irritation. In the present study, we developed BPO-loaded niosomal formulation to improve its permeation through skin. The niosomes were further loaded in the carbopol gel to improve contact time. The results of the skin permeation study, skin retention study revealed that niosomes can effectively improve the drug permeation through skin. Application of niosomal gel significantly reduced the bacterial load after a treatment of four days. This reduction in bacterial load was further resulted in a significant reduction in the inflammation with minimal skin irritation compared with plain drug and the plain niosomal formulation.