In the present investigation, an attempt was made to study and compare, analgesic and anti-inflammatory activity produced by four marketed topical diclofenac formulations in order to justify their usefulness in the treatment of pain and inflammation. By using a diffusion cell, in vitro percutaneous permeation studies were carried out to correlate in vivo activity. The in vivo analgesic activity study was performed by tail flick method on Wistar albino rats. The anti-inflammatory activity was performed on rats by carrageenan induced inflammation. It was evident from the study that three among tested three gels; diclofenac permeated effectively through the skin and was able to elicit analgesic and anti-inflammatory responses. The study also indicated the presence of therapeutic inequivalence among the marketed topical formulation and the need of bio equivalency and therapeutic equivalency testing of marketed topical applications meant for therapeutic use.