Aim: Retinyl palmitate (RP), the most stable vitamin A derivative, is used to treat photoaging and other skin disorders. The need to minimize the adverse effects of topical drug administration has led to an enhanced interest in loading RP on ethosomes for topical drug delivery. The aim of the current study was to prepare and compare the performance of RP decorated ethosomal hydrogel with tretinoin cream in the treatment of acne vulgaris as an approach to improve drug efficacy and decrease its side effects. Methods: RP-loaded ethosomes were prepared using the injection sonication technique. A Box-Behnken design using Design Expert ® software was used for the optimization of formulation variables. Particle size, zeta potential (ZP), entrapment efficiency percent (EE %), % drug release, and permeation over 24 h of different formulations were determined. The optimal formulation was incorporated into a hydrogel. Finally, the efficacy and tolerability of the optimized RP ethosomal hydrogel were clinically evaluated for acne treatment using a split-face comparative clinical study. Results: The optimized ethosomal RP showed particle size of 195.8±5.45 nm, ZP of −62.1 ±2.85 mV, EE% of 92.63±4.33%, drug release % of 96.63±6.81%, and drug permeation % of 85.98 ±4.79%. Both the optimized RP ethosomal hydrogel and tretinoin effectively reduced all types of acne lesions (inflammatory, non-inflammatory, and total lesions). However, RP resulted in significantly lower non-inflammatory and total acne lesion count than the marketed tretinoin formulation. Besides, RP-loaded ethosomes showed significantly improved tolerability compared to marketed tretinoin with no or minimal skin irritation symptoms. Conclusion: RP ethosomal hydrogel is considerably effective in controlling acne vulgaris with excellent skin tolerability. Therefore, it represents an interesting alternative to conventional marketed tretinoin formulation for topical acne treatment.