Miconazole nitrate is a widely used antifungal agent, but its use in topical formulations is not efficacious because deep seated fungal infections are difficult to treat with conventional topical formulation. Miconazole nitrate loaded ultraflexible liposomes have been prepared and their topical performance has been compared with conventional liposomes containing miconazole nitrate. Various ultraflexible liposomal formulations were prepared and extensively characterized for vesicular shape, size, entrapment efficiency, degree of deformability and in-vitro skin permeation through rat skin. Higher rate of drug transfer across the skin with ultraflexible liposomal formulations of miconazole nitrate suggests that the drug in its lipo-solubilized state might have gained facilitated entry into the tough barrier consisting of subcutaneous. In-vivo study showed better antifungal activity as compared to traditional liposomes and plain drug solution. This was confirmed through fluoroscence microscopy. It is concluded that prepared ultraflexible liposomes can facilitate improved and localized drug action in the skin, thus providing a better option to deal with deep seated skin problems.