Skin delivery of NSAIDs offers several advantages over the oral route associated with potential side effects. In the present investigation, topical gel of meloxicam (MLX) was formulated using N-methyl pyrrolidone (NMP) as a solubilizer and Carbopol Ultrez 10® as a gelling polymer. MLX gel was evaluated with respect to different physicochemical parameters such as pH, viscosity and spreadability. Irritation potential of MLX gel was studied on rabbits. Permeation of MLX gel was studied using freshly excised rat skin as a membrane. Anti-inflammatory activity of MLX gel was studied in rats and compared with the commercial formulation of piroxicam (Pirox® gel, 0.5% m/m). Accelerated stability studies were carried out for MLX gel for 6 months according to ICH guidelines. MLX gel was devoid of any skin irritation in rabbits. After 12 h, cumulative permeation of MLX through excised rat skin was 3.0 ± 1.2 mg cm-2 with the corresponding flux value of 0.24 ± 0.09 mg cm-2 h-1. MLX gel exhibited significantly higher anti-inflammatory activity in rats compared to Pirox® gel. Physicochemically stable and non-irritant MLX gel was formulated which could deliver significant amounts of active substance across the skin in vitro and in vivo to elicit the anti-inflammatory activity.