Microemulsions (ME) have been proved to increase the cutaneous absorption of both lipophilic and hydrophilic medicaments when compared to conventional vehicles (emulsions, pure oils, aqueous solutions). Hence the aim of the present investigation is to prepare, characterize and optimize microemulsion of Itraconazole (ITZ). Itraconazole is an anti fungal agent, most widely used in the ringworm infection. It is classified as class III drug as per BCS classification. It indicates lower permeability through the skin. Therefore the objective of the research is to improve permeability of Itraconazole through the skin. The microemulsion was prepared using eucalyptus oil, tween 20 and methanol as the oil phase, surfactant and co-surfactant respectively. Pseudo-ternary phase diagrams were constructed to find out the optimum ratio of oil: S mix (surfactant: Co-Surfactant): water. A 3 2 full factorial design was applied to the optimization of the prepared microemulsion. The microemulsion was evaluated for globule size, zeta potential, in-vitro diffusion study etc. Results of globule size measurements and zeta potential indicated ME7 had high stability than other formulation of the microemulsion. For the optimization transdermal flux and %Q6 was selected as dependant variables. Results of optimization study also revealed ME 7 as optimized microemulsion for high permeability to the skin. Further ME7 was compared to marketed Itraconazole preparation (ITASPORE) and evaluated using similarity factor F 2. Results of F 2 value was not near to 100 indicated there is no similarity in diffusion profiles of ME7 and ITASPORE. Hence, indirectly it suggests there was increased in permeability of drug by preparing microemulsion.