The purpose of the current study was to prepare and evaluate a citronella oil-loaded microemulsion-based micro-emulgel for the treatment of Candida albicans. The primary objective was to use the skin to transfer hydrophobic medications into the bloodstream. The formulation included cinnamon oil as an antifungal oil and citronella oil as an active pharmaceutical ingredient, respectively. Tween 80 and PEG 200 were used as the surfactant and co-surfactant, respectively, to create phase diagrams. Carbopol 940, one of the frequently used polymers, was investigated for its ability to prepare gel formulations. The optimized (F3) batch contained the highest percentage (87.05 ± 0.03%) of drug content and, according to the statistics provided, had the highest drug release rate of around 87.05% within 4 h. The Korsmeyer–Peppas model with n value of 0.82, which is in the range 0.5–1, had the highest r2 value, indicating that release following non-Fickian/anomalous diffusion provided a better dimension for all of the formulations. The optimized (F3) formulation had stronger antifungal activity in comparison to other formulations. This leads to the conclusion that citronella oil can be made into a micro-emulgel, which may improve its release in aqueous systems while maintaining a high level of drug release at the target site.