The objective of present study is to develop and evaluate the Elastic liposomes of Clotrimazole so as to provide the sustained release and to enhance the anti-fungal activity of the drug. Elastic liposomes were prepared by rotary evaporation method using Span 80 as an surfactant. The prepared Elastic liposomes were evaluated for entrapment efficiency, vesicle size, vesicle size distribution, no. of vesicles, stability study, invitro drug release, ex-vivo skin permeation study and microbiological study. The entrapment efficiency of resultant optimized Elastic liposomes was 73.5%±1.61, vesicle size (100nm), vesicle size distribution (in the normal size range of 1-10μm), models of in-vitro drug release confirmed sustained release and non-fickian diffusion, exvivo studies confirmed higher skin permeation and morphological studies confirmed enhanced antifungal activity of optimized Elastic liposomes.