Osteoarthritis (OA) is a degenerative joint disease that occurs when there is a change in the mechanical and biological properties of the articular cartilage and the subchondral bone; The condition is more prevalent in women than in men. Pequi oil (PO), which is extracted from the fruits of the pequi tree (Caryocar coriaceum Wittm), is widely used in traditional medicine in the Brazilian northeast for the management of inflammation and joint pain. The aim of this study was to develop a pharmaceutical formulation containing Carbopol® hydrogel nanoencapsulated with pequi pulp fixed oil (PeONC) and evaluate its therapeutic effect on functionality and pain in women with knee osteoarthritis. The study was divided into two stages: Stage 1 - preparation and physico-chemical characterization of the pharmaceutical formulation containing PeONC, cell viability assays and skin irritability testing. Step 2 – A double-blind randomized clinical trial evaluating knee symptoms, quality of life, pressure pain, function, muscle strength and range of motion. The nanoformulation was in a gel form, with a particle size of 209.5 ± 1.06 nm, a pH of 6.23 ± 0.45, a zeta potential of − 23.1 ± 0.4 mV, a polydispersity index of 0.137 ± 0.52, and containing nanocapsules with a spherical shape a polymeric wall and an oily nucleus. The gel showed no cytotoxicity and was not irritating to human skin. The treatment with PeONC increased the strength of the knee flexor and extensor muscles and the total motion range of the knee. In addition, the treatment reduced knee instability, pain, swelling, and locking; There was also an improvement in some items of the SF-36 quality of life questionnaire such as in respect of functional capacity and social aspects. In conclusion, PeONC was found to be a stable, safe formulation with no toxicity in respect of topical use in humans. Additionally, the treatment produced an increase in muscle strength and functionality that was associated with reduced knee symptoms and improved quality of life. Our findings showed that in a group of women treated with PeONC mitigated the symptoms of knee osteoarthritis.