Cooking oil based food-grade nanoemulsion was formulated by ultrasonic emulsification method. Process of nanoemulsion formulation was optimized for parameters such as surfactant type, surfactant concentration and emulsification time to achieve minimum droplet diameter with high physical stability. Surfactant concentration plays important role in reducing emulsion droplet size. Emulsification time also minimizes droplet size during ultrasonic emulsification. Increase in surfactant concentration and emulsification time resulted in reduction of droplet diameter and increased stability of the emulsion. Tween80 minimized emulsion droplets better than Tween20. Stable mustard oil nanoemulsion (MT804) with droplet diameter 25 nm was formulated by ultrasonic emulsification for 30 min using Tween80 as surfactant. Droplet size of the emulsion correlates with optical transparency. Reduction in droplet size results in significant decrease in emulsion turbidity. Mustard oil nanoemulsion formulation MT804 was found to be optically transparent. The mustard oil nanoemulsion droplets were found to be spherical in morphology. Copyright © 2013 American Scientific Publishers.