The present research work was designed to prepare butenafine (BN)-loaded bilosomes (BSs) by the thin-film hydration method. BN is a sparingly water-soluble drug having low permeability and bioavailability. BSs are lipid-based nanovesicles used to entrap water-insoluble drugs for enhanced permeation across the skin. BSs were prepared by the thin-film hydration method and optimized by the Box-Behnken design (BBD) using lipid (A), span 60 (B), and sodium deoxycholate (C) as independent variables. The selected formulation (BN-BSo) was converted into the gel using Carbopol 940 as a gelling agent. The prepared optimized gel (BN-BS-og) was further evaluated for the gel characterization, drug release, drug permeation, irritation, and anti-fungal study. The optimized bilosomes (BN-BSo) showed a mean vesicle size of 215 ± 6.5 nm and an entrapment efficiency of 89.2 ± 1.5%. The DSC study showed that BN was completely encapsulated in the BS lipid matrix. BN-BSog showed good viscosity, consistency, spreadability, and pH. A significantly (p < 0.05) high release (81.09 ± 4.01%) was achieved from BN-BSo compared to BN-BSog (65.85 ± 4.87%) and pure BN (17.54 ± 1.37 %). The permeation study results revealed that BN-BSo, BN-BSog, and pure BN exhibited 56.2 ± 2.7%, 39.2 ± 2.9%, and 16.6 ± 2.3%. The enhancement ratio of permeation flux was found to be 1.4-fold and 3.4-fold for the BN-BS-og and pure BN dispersion. The HET-CAM study showed that BN-BSog was found to be nonirritant as the score was found within the limit. The antifungal study revealed a significant (p < 0.05) enhanced antifungal activity against C. albicans and A. niger. The findings of the study revealed that BS is an important drug delivery system for transdermal delivery.