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Tea tree oil is an essential oil of Melaleuca alternifolia which has antibacterial activity. Hydrophobic properties of tea tree oil cause problem in the formulation of drug product as well as water-based cosmetics. This study aims to formulate tea tree oil into nanoemulsion gel dosage form and evaluate its physical stability and antibacterial activity. Nanoemulsion gel was formulated in various concentrations of tea tree oil, which were 5%, 7%, and 9% using tween 80 as surfactant and propylene glycol as co-surfactant. Tea tree oil nanoemulsion gel showed stable physical appearance during 8 weeks of storage at low temperature (4°C ± 2°C) and room temperature (25° ± 2°C), cycling test, as well as mechanical test. The best formula was nanoemulsion gel F1 containing 5% of tea tree oil because it had good stability, smaller droplet size, and more viscous. Results of in vitro antibacterial activity study showed that tea tree oil nanoemulsion gel had antibacterial activity against Propionibacterium acnes by the formation of inhibition zone. Higher concentration of tea tree oil in nanoemulsion gel (5%, 7%, and 9%) showed greater mean inhibition zone (28.33 ± 0.88 mm; 30.33 ± 0.33 mm; and 31.67 ± 0.33 mm).