The GC-MS analysis of tea tree oil (TTO) revealed 38 volatile components with sesquiterpene hydrocarbons (43.56%) and alcohols (41.03%) as major detected classes. TTO efficacy is masked by its hydrophobicity; nanoencapsulation can address this drawback. The results showed that TTO-loaded solid lipid nanoparticles (SLN1), composed of glyceryl monostearate (2% w/w) and Poloxamer188 (5% w/w), was spherical in shape with a core-shell microstructure. TTO-SLN1 showed a high entrapment efficiency (96.26 ± 2.3%), small particle size (235.0 ± 20.4 nm), low polydispersity index (0.31 ± 0.01), and high negative Zeta potential (−32 mV). Moreover, it exhibited a faster active agent release (almost complete within 4 h) compared to other formulated TTO-SLNs as well as the plain oil. TTO-SLN1 was then incorporated into cellulose nanofibers gel, isolated from sugarcane bagasse, to form the ‘TTO-loaded nanolipogel’ which had a shear-thinning behavior. Second-degree thermal injuries were induced in Wistar rats, then the burned skin areas were treated daily for 7 days with the TTO-loaded nanolipogel compared to the unmedicated nanolipogel, the TTO-loaded conventional gel, and the normal saline (control). The measurement of burn contraction proved that TTO-loaded nanolipogel exhibited a significantly accelerated skin healing, this was confirmed by histopathological examination as well as quantitative assessment of inflammatory infiltrate. This study highlighted the success of the proposed nanotechnology approach in improving the efficacy of TTO used for the repair of skin damage induced by burns