Psoriasis is a widespread chronic disease affecting 1-3 % of total population. In major cases (>80 %), it is treated by topical application of corticosteroids. However, the topical route is very challenging due to physico-chemical nature of diseased stratum corneum and so no single treatment works for every patient. The oral route showed severe side effects due to systemic immunosuppression, which can be avoided by topical route. The aim of the research work was to investigate cyclosporine loaded microemulsion based gel for effective cyclosporine permeation and retention in the skin tissue for psoriasis treatment. The pseudo ternary phase diagram at three Smix ratios (2:1, 1:1, and 1:2; Tween 80: isopropyl alcohol) were constructed using isopropyl myristate as oil phase. The Smix at 2:1 ratio showed large microemulsion area. The transmission electron microscope images showed spherical non-aggregated oil globules with the size < 50 nm. The selected microemulsion (Cy-2-ME12O55SM) was incorporated in Carbopol 940 gel for topical application. The ex vivo diffusion study showed improved permeation (>24 h) with microemulsion-gel in comparison to cyclosporine suspension. The microemulsion-gel was non-irritating on the rabbit skin. In drug retention studies, microemulsion-gel showed high drug retention (trapping, 38.92 %) in the skin tissue, which was due to destabilization of microemulsion after penetration in the skin layer causing precipitation of cyclosporine. The depot effect due to cyclosporine precipitates could be helpful for sustained effect of cyclosporine for the effective treatment of psoriasis.