Aid in support of gender equality and women's empowerment has gathered significant momentum over the past decade and has also sparked a renewed debate over the effectiveness of foreign aid. Is gender aid a panacea that will help the recipient countries confront the challenges of the gender inequality deeply ingrained in their societies, or is it just a placebo pretending to be effective? Is there any difference between gender‐focused aid and gender mainstreaming aid in terms of aid effectiveness? To answer these key questions, this article examines the impact of gender aid on gender inequality using a sample of 116 recipient countries that covers the period from 2010 to 2019. By adopting a hybrid method that incorporates fixed‐ and random‐effects models, we obtain results indicating that increasing amounts of gender mainstreaming aid over time successfully reduce gender inequality and close the gender gap. In stark contrast, gender‐focused aid lacks the statistical significance needed to prove its potency. In addition to confirming gender aid's effectiveness, this article provides further policy implications regarding the gender mainstreaming strategy in the field of international development, particularly when considered in the context of the 2030 Agenda for Sustainable Development.