Abstract. Cetirizine is a piperazine-derived second-generation antihistaminic drug recommended for treatment of pruritus associated with atopic dermatitis. The present investigation encompasses development of a nanosized novel elastic vesicle-based topical formulation of cetirizine dihydrochloride using combination of Phospholipon® 90G and edge activators with an aim to have targeted peripheral H 1 antihistaminic activity. The formulation was optimized with respect to phospholipid/drug/charge inducer ratio along with type and concentration of edge activator. The optimized formulation was found to be satisfactory with respect to stability, drug content, entrapment efficiency, pH, viscosity, vesicular size, spreadability, and morphological characteristics. The ex vivo permeation studies through mice skin were performed using Franz diffusion cell assembly. It was found that the mean cumulative percentage amount permeated in 8 h was almost twice (60.001±0.332) as compared to conventional cream (33.268±0.795) and aqueous solution of drug (32.616±0.969), suggesting better penetration and permeation of cetirizine from the novel vesicular delivery system. Further, therapeutic efficacy of optimized formulation was assessed against oxazolone-induced atopic dermatitis in mice. It was observed that the developed formulation was highly efficacious in reducing the itching score (4.75 itches per 20 min) compared to conventional cream (9.75 itches per 20 min) with profound reduction in dermal eosinophil count and erythema score. To conclude, a novel vesicular, dermally safe, and nontoxic topical formulation of cetirizine was successfully developed and may be used to treat atopic dermatitis after clinical investigation.