Halobetasol propionate (HP) is an ultra-potent corticosteroid used in management of severe and recurrent cases of Atopic Dermatitis (AD). The marketed cream formulations are based on synthetic surfactants which often aggravate AD. The present studies investigate biocompatible pluronic lecithin organogel (PLO) of Halobetasol propionate in management of AD. Organogels were prepared by aqueous titration method and preliminary ternary phase studies optimized the ratio of surfactant (phospholipon 90G) to co-surfactant (propylene glycol). The optimized organogel comprised of surfactant and co-surfactant in ratio of 2: 1, which exhibited satisfactory morphology and rheology. Systematic analysis by employing statistical models revealed that increasing concentration of lecithin and pluronic enhanced the viscosity of formulation and inhibited drug release. The developed formulation showed enhanced drug retention in skin as compared to marketed HP cream in exvivo permeation studies across rodent skin. Increased and deeper layer permeation from the PLO was confirmed by confocal microscopy using a fluorescent marker. Histopathological evaluation of excised skin from treated rats revealed non-irritating nature of the PLO. The present studies indicate the possibility of non-irritating biocompatible dosage form for potent steroids which increase drug permeation but does not aggravate AD. It is also expected to alleviate xerosis and has potential for dose reduction of the drug.