Dapsone’s (Dap) limited solubility in water enforce the formulator to use higher percent of Dapsone to make its formulation effective for treatment of acne vulgaris. However, due to use of higher percent, Dapsone often recrystallize within the formulation leaving the product cosmetically non-elegant and gritty feel. Cyclodextrins (CDs) are oligosaccharides which forms host-guest inclusion complexes with lipophilic molecules, resulting in enhanced solubility and permeability of such molecules in oral dosage forms. The use of CDs in topical formulations has received much attention from few decades which enhances the drug permeation through skin by modulation of lipidic passage of skin and targeting actives at the site of action by increased permeation. Thus, the present study aimed to formulate the in-situ cyclodextrin (host) based inclusion complex of Dapsone (guest) which causes improvement in solubility and permeation at a concentration effective to treat acne vulgaris and to avoid recrystallization within the formulation. The interaction between Dapsone (Dap) and Hydroxypropyl β-cyclodextrin (Betadex®) (HPβCD) in the solution state was investigated using phase solubility technique. Box-Behnken design was used to optimize the concentration of Dapsone, CDs and solubilizers. To assess the efficacy of all the DoE batches for anti-acne activity, Ex-vivo Antibacterial activity through zone of inhibition studies, Cumulative release of Dapsone and Adapalene through enhancer cell apparatus. Dapsone showed potent antibacterial activity for Propionibacterium acnes strain through the cylinder plate technique from combination gel at concentration much lower than the marketed product due to increased solubility. The responses of all dependent variables were used to generate surface response and contour plots. DoE software “Minitab” was used to derive optimized concentration of variables studied in the research and the optimized formulation has the Dapsone concentration in the range of 2.5 to 3.7%, Cyclodextrin in the range of 1.5 to 2.0% and the solubilizer in the range of 22 to 27% which produced stable gel without recrystallization of Dapsone and have similar or enhanced anti acne activity than marketed products which was studied by ex vivo permeation through rat skin. The present study demonstrated that the cyclodextrin based combination product of Adapalene and Dapsone gel could be the possible cost effective and cosmetically elegant alternative to the conventional marketed topical formulation for the treatment of acne