Plant-based bioactive compounds have been utilized to cure diseases caused by pathogenic microorganisms and as a substitute to reduce the side effects of chemically synthesized drugs. Therefore, in the present study, Azadirachta indica oil nanohydrogel was prepared to be utilized as an alternate source of the antimicrobial compound. The total phenolic compound in Azadirachta indica oil was quantified by chromatography analysis and revealed gallic acid (0.0076 ppm), caffeic acid (0.077 ppm), and syringic acid (0.0129 ppm). Gas chromatography−mass spectrometry analysis of Azadirachta indica oil revealed the presence of bioactive components, namely hexadecenoic acid, heptadecanoic acid, ç-linolenic acid, 9-octadecanoic acid (Z)-methyl ester, methyl-8-methyl-nonanoate, eicosanoic acid, methyl ester, and 8-octadecane3-ethyl-5-(2 ethylbutyl). The nanohydrogel showed droplet size of 104.1 nm and −19.3 mV zeta potential. The nanohydrogel showed potential antimicrobial activity against S. aureus, E. coli, and C. albicans with minimum inhibitory, bactericidal, and fungicidal concentrations ranging from 6.25 to 3.125 (µg/mL). The nanohydrogel showed a significantly (p < 0.05) higher (8.40 log CFU/mL) value for Gram-negative bacteria E. coli compared to Gram-positive S. aureus (8.34 log CFU/mL), and in the case of pathogenic fungal strain C. albicans, there was a significant (p < 0.05) reduction in log CFU/mL value (7.79−6.94). The nanohydrogel showed 50.23−82.57% inhibition in comparison to standard diclofenac sodium (59.47−92.32%). In conclusion, Azadirachta indica oil nanohydrogel possesses great potential for antimicrobial and anti-inflammatory activities and therefore can be used as an effective agent.