The current research aims at development and assessment of o/w nystatin microemulsion. The pseudoternary phase diagrams were developed to determine microemulsion existence regions by water titration method. Nystatin was liquefied in the blend of oil phase, surfactant and cosurfactant. Microemulsion was made by deliberate mixing of water and stirring in this blend. The S-mix (surfactant-cosurfactant mixtures) of the ratio 1:2 was found better than 1:1 and 2:1 S-mix ratios. In vitro permeation studies by Franz diffusion cell revealed faster rate of nystatin release from such microemulsion (5.37μg/cm2/h) as compared to nystrin (4.79μg/cm2/h), a commercially available aqueous suspension. Kinetic modeling demonstrated zero order drug release and release mechanism found to be anomalous i.e. superposition of dispersion and swelling controlled drug release. Antifungal activity was performed using well diffusion method in vitro against Candida albicans cultures grown on Sabouraud's dextrose agar. The results also confirmed the high diffusion rate of drug from microemulsion as compared to aqueous suspension. The outcomes of this study propose that topical microemulsion of nystatin provides better antifungal activity as compared to emulsion gels or aqueous suspensions.