The purpose of this study was to formulate topical microemulsion gel of citronella oil suitable for topical delivery. Citronella oil micro emulsion system with Tween 20 as Surfactant, PEG 200 as cosurfactant and citronella oil as oil was developed for topical delivery. Pseudo ternary phase diagram were constructed to identify the microemulsion region and a suitable composition was identified to formulate the microemulsion. Single isotropic region, which is considered as an O/W microemulsion was found in the pseudo ternary phase diagram developed at various Tween 20 and PEG 200 ratio using phase titration method. The developed microemulsion was characterized for clarity, Zeta potential, Viscosity, Globule size. Centrifugation studies were carried out to confirm the stability of the developed formulation. The formulation was thickened with a gelling agent carbopol 940 and xanthum gum, to yield a gel with desirable properties facilitating the topical application. The developed microemulsion based gel was characterized for pH, Spreadability, Viscosity. Optimized microemulsion based gel formulation was found to exhibit significant antifungal activity against candida Albicansspecies. Thus the present study indicates that developed topical microemulsion gel of citronella oil effective for treatment of fungal infection.