Rheumatoid arthritis (RA) is an immune-mediated inflammatory disease. Combination therapy is anticipated to surpass monotherapy by targeting multiple pathways involved in RA progression. The present aim is to develop a combination of Teriflunomide (TFD) and Quercetin (QCN) loaded transferosomal gel to enhance permeability and achieve localized delivery to joint tissues. TFD or QCN transferosomes were optimized employing a 3-level, 3-factorial design Box-Behnken design (BBD). The transferosomes exhibited sustained in-vitro drug release. The topical combination gel underwent thorough evaluation of rheology, and also ex-vivo studies showed enhanced permeability through rat skin. The synergistic combination of TFD and QCN effectively suppressed NO, TNF-α and IL-6 levels in in-vitro RAW 264.7 cells. The cytotoxicity in HaCaT cell lines indicates non-toxicity of the gel, further confirmed by skin irritation study conducted in rats. The in-vivo anti-arthritic activity was evaluated in complete freund’s adjuvant induced rat paw edema model illustrates the effectiveness of the combination transferosomal gel compared to other treatment groups. In conclusion, the topical delivery of TFD and QCN combination transferosomal gel demonstrated anti-arthritic activity through localized delivery whichallows for dose reduction, thereby may reduce the systemic drug exposure and mitigate the side effects associated with oral administration of TFD.