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Arthritis is a persistent inflammatory condition that necessitates efficient and precise drug delivery systems to improve therapeutic results. The objective of this study was to create and assess a polyvinyl alcohol (PVA)-stabilized nanoemulsion containing methylsulfonylmethane (MSM) to enhance solubility, stability, and transdermal absorption. The novelty of this study lies in the innovative use of PVA-stabilized nanoemulsions for improving the bioavailability of MSM, a compound known for its anti-inflammatory properties but limited by poor solubility. The nanoemulsion was developed utilizing an oil-in-water (O/W) method and assessed for particle size, polydispersity index (PDI), zeta potential, viscosity, and drug encapsulation efficiency. The optimized formulation (F5) demonstrated a nanoscale droplet size of 102.4 ± 2.6 nm, a low PDI of 0.290, a high encapsulation efficiency of 92.5%, and maintained stability for over 90 days under controlled storage conditions. The in vitro drug release studies revealed a sustained release profile, with F5 attaining a cumulative drug release of 97.8% over a 24-hour period. Ex-vivo skin permeation and deposition studies demonstrated improved transdermal delivery, with F5 exhibiting the highest permeation rate at 89.2% and notable skin deposition. The findings from the skin irritation study demonstrated outstanding biocompatibility, showing minimal irritation levels similar to those of normal saline. Additionally, in vivo assessments of anti-arthritic effects utilizing a Complete Freund’s Adjuvant (CFA)-induced arthritis model revealed notable decreases in paw swelling and joint inflammation, similar to the effects observed with diclofenac treatment (p < 0.05). The results indicate that PVA-stabilized MSM nanoemulsion presents a viable, biocompatible, and sustained-release transdermal drug delivery system for the management of arthritis. Additional investigations, such as clinical trials, are suggested to confirm its therapeutic potential for human use. This study focuses on the development of a nanoemulsion system incorporating Methylsulfonylmethane (MSM) and Polyvinyl alcohol (PVA) for the transdermal delivery of drugs aimed at treating arthritis. The formulation is designed to achieve sustained release, enhancing therapeutic efficacy.