The purpose of the present study was to develop emulsions encapsulated by chitosan on the outer surface of a nano droplet containing 5-fluorouracil (5-FU) as a model drug. The emulsions were characterized in terms of size, pH and viscosity and were evaluated for their physicochemical properties such as drug release and skin permeation in vitro. The emulsions containing tween 80 (T80), sodium lauryl sulfate, span 20, and a combination of polyethylene glycol (PEG) and T20 exhibited a release of 88%, 86%, 90% and 92%, respectively. Chitosan-modified emulsions considerably controlled the release of 5-FU compared to a 5-FU solution (p < 0.05). All the formulations enabled transportation of 5-FU through a rat’s skin. The combination (T80, PEG) formulation showed a good penetration profile. Different surfactants showed variable degrees of skin drug retention. The ATR-FTIR spectrograms revealed that the emulsions mainly affected the fluidization of lipids and proteins of the stratum corneum (SC) that lead to enhanced drug permeation and retention across the skin. The present study concludes that the emulsions containing a combination of surfactants (Tween) and a co-surfactant (PEG) exhibited the best penetration profile, prevented the premature release of drugs from the nano droplet, enhanced the permeation and the retention of the drug across the skin and had great potential for transdermal drug delivery. Therefore, chitosan-coated 5-FU emulsions represent an excellent possibility to deliver a model drug as a transdermal delivery system.