The present research was aimed to develop a terbinafin hydrochloride (TH)-encapsulated solid lipid nanoparticles (SLNs) hydrogel for improved antifungal efficacy. TH-loaded SLNs were obtained from glyceryl monostearate (lipid) and Pluronic^® F68 (surfactant) employing high-pressure homogenization. The ratio of drug with respect to lipid was optimized, considering factors such as desired particle size and highest percent encapsulation efficiency. Lyophilized SLNs were then incorporated in the hydrogel prepared from 0.2–1.0% w/v carbopol 934P and further evaluated for rheological parameters. The z-average, zeta potential and polydispersity index were found to be 241.3 nm, −15.2 mV and 0.415, respectively. The SLNs show a higher entrapment efficiency of about 98.36%, with 2.12 to 6.3602% drug loading. SEM images, XRD and the results of the DSC, FTIR show successful preparation of SLNs after freeze drying. The TH-loaded SLNs hydrogel showed sustained drug release (95.47 ± 1.45%) over a period of 24 h. The results reported in this study show a significant effect on the zone of inhibition than the marketed formulation and pure drug in Candida albicans cultures, with better physical stability at cooler temperatures. It helped to enhance skin deposition inthe ex vivostudy and improved, in vitro and in vivo, the antifungal activity.