The aim of the present study was to develop and characterize karanjin-loaded ethosomes-based gel formulation for enhanced topical delivery and effective therapy of skin acne. Karanjin-loaded ethosomes (K-ETH) presented a nanometric size of 140.87 ± 2.35 nm, entrapment of 71.41 ± 2.74% and enhanced permeation with 1.9 times increase in the flux and 2.4 times higher skin deposition compared to the hydro-ethanolic solution of karanjin. The DSC analysis confirmed successful entrapment of the karanjin within the ethosomes. The developed ethosomes were incorporated in the carbopol gel for adequate application on the skin surface. The ethosomal gel (K-EGF) also exhibited greater penetration in the rat skin as revealed by CLSM. The optimized K-EGF formulation was non-irritant to the skin as evident by Draize score test and histopathological examination. The highest zone of inhibition, 30.0 ± 1.52 mm and 36.22 ± 0.57 mm was produced by the K-EGF against Propionibacterium acnes and Staphylococcus epidermidis, respectively, indicating substantial antibacterial properties of the K-EGF. DPPH assay indicated its potent antioxidant effects. Substantial anti-inflammatory effects in the carrageenan-induced edema in the rat paw were evident with inhibition of rat paw edema by 66.66% and 70.37% upon application of K-EGF and standard anti-inflammatory agent, respectively. Anti-acne effects were also evident with K-EGF treatment with significant decrease in number and size of sebaceous gland units in dermis. Overall, the above findings vouch for a therapeutic opportunity to improve topical delivery of karanjin in acne treatment employing ethosomal gels as the promising carrier system.