Essential oils (EOs) are concentrated, hydrophobic volatile compounds derived from different parts of plants. They are recognized for their diverse and versatile functional properties. Approximately 90% of EOs are administered via topical or transdermal routes. However, EOs are susceptible to oxidation, and their high volatility often poses a challenge to the transdermal delivery of their bioactive constituents. Additionally, the direct application of pure EOs on the skin may result in irritating effects. Hence, various novel carrier systems have been explored for the topical application of EOs. Among these, nanoemulgel has received particular attention from the cosmeceutical industry. It is a hybrid technology combining nanoemulsion and a gelling phase, which can enhance the bioadhesivity of EOs, at the same time minimizing their irritating effects. This review summarizes the methods of EO extraction, steps and factors influencing the preparation of EO nanoemulgel, and characterization parameters for nanoemulgel studies. The potential cosmeceutical applications of EO nanoemulgels as an anti-inflammatory, antimicrobial, antioxidant, and penetration enhancer are also compiled and discussed.