Treatment of atopic dermatitis (AD) is challenging due to its complex pathophysiology. Tetrahydrocurcumin (THC) a polyphenolic, colorless compound that is more polar than curcumin. It possesses superior anti-inflammatory properties and has a clinical advantage over curcumin. The present study investigated the therapeutic effectiveness of THC solid lipid nanoparticle (THC-SLN)-based gels in AD. THC-SLNs prepared using microemulsification resulted in a particle size of 109.2 nm as determined by nanoparticle tracking, and FTIR confirmed the entrapment of drug within the lipid matrix. THC-SLNs greatly enhanced skin hydration when tested both ex vivo and in vivo in Lacca mice. Deeper skin penetration was clearly established using dermatokinetics and CLSM. The in vivo pharmacodynamics of THC-SLNs gel in 2,4-dinitrochlorobenzene (DNCB)-induced AD mice showed enhanced bioactivity; reduced levels of TNF-α and IL-6; and complete healing, as evident from histopathological studies. Thus, the novel topical THC-SLN gel has potential to emerge as a safe alternative to conventional corticosteroids for AD and other skin disorders with overbearing inflammation.