Aim This study aimed to utilise the proficient function of diacerein (DCR) and anti-inflammatory polymers to develop sustained release nanoencapsulated emulgel for potential use in osteoarthritis (OA). Methods Chitosan (CHS) and chondroitin sulphate (CS) were employed as natural anti-inflammatory polymers to encapsulate nanoformulation of DCR. Optimised nanoformulation was prepared and characterised by investigating impact of polymers and surfactant on particle size, PDI, and encapsulation efficiency (EE). Afterwards, nanoemulgel of optimised DCR-NPs was formulated and evaluated for transdermal application. Results Optimised nanoformulation depicted spherical shape with particle size of 320 nm having PDI and EE of 0.3 +/- 0.07 and 82 +/- 4% (w/w), respectively. DCR-nanoemulgel depicts sustained action of drug up to 96 h with enhanced permeation activity and non-irritancy index. Conclusions The elaborated nanoemulgel sustained release of drug having superior penetration properties with provision of enhanced therapeutic effect owing to the presence of CHS, CS, and Argan oil possessing indelible anti-inflammatory attributes.