This study investigated pH-responsive Terbinafine HCL (TBH)-loaded nanogels as a new approach to treating superficial fungal infections. Acrylic acid (AA) is a synthetic monomer that was crosslinked with a natural polymer (gelatin) using a free radical polymerization technique to fabricate gelatin-g-poly-(acrylic acid) nanogels. Ammonium persulphate (APS) and N, N′-methylene bisacrylamide (MBA) were used as the initiator and crosslinker, respectively. Developed gelatin-g-poly-(acrylic acid) nanogels were evaluated for the swelling study (pH 1.2, 5, 7.4), DEE, particle size, FTIR, thermal stability (TGA, DSC), XRD, SEM, DEE, and in vitro drug release study to obtain optimized nanogels. Optimized nanogels were incorporated into 1% HPMC gel and then evaluated in comparison with Lamisil cream 1% for TBH stratum corneum retention, skin irritation, and in vitro and in vivo antifungal activity studies. Optimized nanogels (AAG 7) demonstrated a 255 nm particle size, 82.37% DEE, pH-dependent swelling, 92.15% of drug release (pH) 7.4 within 12 h, and a larger zone of inhibition compared to Lamisil cream. HPMC-loaded nanogels significantly improved the TBH skin retention percentage, as revealed by an ex vivo skin retention study, indicating the usefulness of nanogels for topical use. In vivo studies conducted on animal models infected with a fungal infection have further confirmed the effectiveness of nanogels compared with the Lamisil cream. Hence, Gelatin-g-poly-(acrylic acid) nanogels carrying poorly soluble TBH can be a promising approach for treating superficial fungal infections.