The aim of the investigation was to design a proniosomal carrier system of metformin hydrochloride for the treatment of type - 2 diabetes mellitus that is capable of delivering entrapped drug over an extended period of time. Proniosomes of metformin hydrochloride were prepared by coacervation phase separation method. The potential of proniosomes as a transdermal drug delivery system was estimated by encapsulating the drug in various formulations of proniosomal gel composed of different ratios of Span 60/Span 40, cholesterol and lecithin. The prepared systems were characterized for encapsulation efficiency, size, zeta potential analysis, in-vitro drug release and vesicular stability at different storage conditions. Stability studies for proniosomal gel were carried out for one month. Proniosomes were also characterized by scanning electron microscopy (SEM) and transmission electron microscopy (TEM) for shape and surface morphology. The results showed that the encapsulation efficiency of proniosomes prepared with span 60 was superior to that prepared with Span 40. A formulation (i.e. PNG2) with 9:2:9 ratio of span 60, cholesterol and lecithin gave maximum encapsulation efficiency (76.8 %), good zeta potential (-51.9) and lowest drug release percent after 24 hrs (75.9%). It is evident from the study that the metformin proniosomal gel is promising prolonged drug delivery system and has reasonably good stability characteristics.