Hydrocortisone (HC) is a topical glucocorticoid for the treatment of atopic dermatitis (AD); the local as well as systemic side effects limit its use. Hydroxytyrosol (HT) is a polyphenol present in olive oil that has strong antimicrobial and antioxidant activities. HC-HT coloaded chitosan nanoparticles (HC-HT CSNPs) were therefore developed to improve the efficacy against AD. In this study, HC-HT CSNPs of 235 ± 9 nm in size and with zeta potential +39.2 ± 1.6 mV were incorporated into aqueous cream (vehicle) and investigated for acute dermal toxicity, dermal irritation, and repeated dose toxicity using albino Wistar rats. HC-HT CSNPs exhibited LD50 > 125 mg/body surface area of active, which is 100-fold higher than the normal human dose of HC. Compared with the commercial formulation, 0.5 g of HC-HT CSNPs did not cause skin irritation, as measured by Tewameter®, Mexameter®, and as observed visually. Moreover, no-observed-adverse-effect level was observed with respect to body weight, organ weight, feed consumption, blood hematological and biochemical, urinalysis, and histopathological parameters at a dose of 1000 mg/body surface area per day of HC-HT CSNPs for 28 days. This in vivo study demonstrated that nanoencapsulation significantly reduced the toxic effects of HC and this should allow further clinical investigations.