The present invention is a novel microemulsion, which contains tea tree oil with Poloxamer 188 and tween 80 as surfactant and lsoproply alcohol as cosufgactant. The microemulsion system was prepared as a vehicle for transdermal drug delivery with minimum number of components in them. The aim was to increase the premeability of the Tea tree oil through the skin and hence show promising effect in Psoriasis. A simple method for preparation of microemulsion has also been provide. The droplet size of the microemulsion was found to be in the range of 84-115 nm with a PDI of 0.764 indicating uniformity in the microemulsion. Rheological data was assessed using Brookfield viscometer and the viscosity was found to be 0.63 PsS. The maximum terpinen-4-ol content observed was 1.68 �g/mg of microemulsion, which was assessed by HPTLC using toluene and ethyl acetate as mobile phase. The TEM images of the microemulsion depicted sphicted spherical shape and even boundary of the oil particles. Enhanced penetration of Tea Tree oil components was achieved as the studies showed a release of 16.8 within a period of 24 hours. The release was 4 times better than release profile of Tea tree oil formulations as reported in the literature. The studies showed that microemulsion of tea tree oil might be promising vehicles for the transdermal delivery for psoriasis.