Aim: Azelaic acid (AzA), a comedolytic, antibacterial, anti-inflammatory anti-melanogenic agent, prescribed against acne vulgaris is safe on skin. Its combination with another widely used anti-acne agent, tea tree oil (EO) whose delivery is limited by volatility, instability and lipophilicity constraints was attempted. Method: Solvent injection was used to prepare AzA-EO integrated ethosomes. Result: Ethosomes were transformed into carbopol hydrogel, which exhibited pseudo-plastic properties with appreciable firmness, work of shear, stickiness and work of adhesion. The hydrogel showed better permeation and retention characteristics vis-a-vis commercial formulation (AzidermTM), when evaluated in Wistar rat skin. Further, ethosome hydrogel composite was better tolerated with no side effects. Conclusion: The findings suggests that the aforementioned strategy could be a potential treatment used for acne management.