The aim of the present study was to develop liposomal gel containing ketoconazole and neem extract for the treatment of seborrheic dermatitis in an effectual means. Azoles derivatives that are commonly used to prevent superficial fungal infections include triazole category like itraconazole. These drugs are available in the form of oral dosage that required a long period of time for treatment. Ketoconazole is available in the form of gel but is not used with any herbal extract. Neem (Azadirachta indica) leaves show a good anti-bacterial and anti-fungal activity and have great potential as a bioactive compound. The thin film hydration method was used to design an herbal liposomal preparation. The formulation was further subjected to their characterization as particle size, zeta potential, entrapment efficiency, % cumulative drug release, and anti-fungal activity and it was also characterized by the mean of their physicochemical properties such as FTIR, SEM, DSC, TGA, and AFM. The results show that the formulation of liposomes with neem extract F12 were found to be optimum on the basis of entrapment efficiency in the range 88.9 ± 0.7%, with a desired mean particle size distribution of 141.6 nm and zeta potential -45 mV. The anti-fungal activity of liposomal formulation F12 was carried out against Aspergillus niger and Candida tropicalis by measuring the inhibition zone 8.9 and 10.2 mm, respectively. Stability of optimized formulation was best seen at refrigerated condition. Overall, these results indicated that developed liposomal gel of ketoconazole with neem extract could have great potential for seborrheic dermatitis and showed synergetic effect for the treatment.