Celecoxib, a selective COX-2 inhibitor is commonly used in the treatment of arthritis. Recently, cardiotoxic effects associated with conventional modes of delivery of celecoxib have made it pertinent to develop alternate dosage forms capable of selectively delivering the drug topically to affected joints. The aim of the present study was to prepare and characterize niosomal gel formulation for sustained and site-specific delivery of celecoxib. Celecoxib loaded niosomes were prepared and characterized in vitro, ex-vivo and in vivo. The results of organ localization (deep skin layer + muscle) study showed that niosomal gel provided 6.5 times higher drug deposition as compared to carbopol gel (195.2+/-8.7 and 30.0+/-1.5 microg, respectively). The muscle to plasma concentration ratio for niosomal gel formulation was six (2.16+/-0.12 microg/g vs. 0.34+/-0.01 microg/ml) and for carbopol gel it was one (0.36+/-0.01 microg/g vs. 0.43+/-0.02 microg/ml). Biological effectiveness of optimized formulation was evaluated using carrageenan induced rat paw edema model. The application of niosomal gel produced significant reduction of rat paw edema as compared to that after application of conventional gel indicating better skin permeation and deposition of celecoxib from niosomes. The results of the present study demonstrated niosomal gel formulation possess great potential for enhanced skin accumulation, prolonging drug release and improving the site specificity of celecoxib.