Tioconazole (TCZ) is a broad-spectrum fungicidal BCS class II drug with reported activity against Candida albicans, dermatophytes, and certain Staphylococci bacteria. We report the use of TCZ-loaded transethosomes (TEs) to overcome the skin's barrier function. TCZ-loaded TEs were fabricated by using a cold method with slight modification. Box-Behnken composite design was utilized to investigate the effect of independent variables. The fabricated TEs were assessed with various physicochemical characterizations. The optimized formulation of TCZ-loaded TEs was incorporated into gel and evaluated for pH, conductivity, drug content, spreadability, rheology, in vitro permeation, ex vivo permeation, and in vitro and in vivo antifungal activity. The fabricated TCZ-loaded TEs had a % EE of 60.56 to 86.13, with particle sizes ranging from 219.1 to 757.1 nm. The SEM images showed spherically shaped vesicles. The % drug permeation was between 77.01 and 92.03. The kinetic analysis of all release profiles followed Higuchi's diffusion model. The FTIR, DSC, and XRD analysis showed no significant chemical interactions between the drug and excipients. A significantly higher antifungal activity was observed for TCZ-loaded transethosomal gel in comparison to the control. The in vivo antifungal study on albino rats indicated that TCZ-loaded transethosomal gel showed a comparable therapeutic effect in comparison to the market brand Canesten®. Molecular docking demonstrated that the TCZ in the TE composition was surrounded by hydrophobic excipients with increased overall hydrophobicity and better permeation. Therefore, TCZ in the form of transethosomal gel can serve as an effective drug delivery system, having the ability to penetrate the skin and overcome the stratum corneum barrier with improved efficacy.