A proniosome based transdermal drug delivery system of levonorgestrel (LN) was developed and extensively characterized both in vitro and in vivo. The proniosomal structure was liquid crystalline-compact niosomes hybrid which could be converted into niosomes upon hydration. The system was evaluated in vitro for drug loading, rate of hydration (spontaneity), vesicle size, polydispersity, entrapment efficiency and drug diffusion across rat skin. The effect of composition of formulation, amount of drug, type of Spans, alcohols and sonication time on transdermal permeation profile was observed. The stability studies were performed at 4 degrees C and at room temperature. The biological assay for progestational activity included endometrial assay and inhibition with the formation of corpora lutea. The study demonstrated the utility of proniosomal transdermal patch bearing levonorgestrel for effective contraception.